Business rate reform threatens online retailers

4th Mar 2014 13:09

A UK government review into retail business rates may receive a greater shake-up after a report from Parliament's Business, Innovation and Skills Committee demanded the current system be completely reformed.The committee, which is made up of a group of MPs, called for the Chancellor George Osborne's review to look at completely overhauling the current system and recommended that retail taxes should be based on sales instead of the value of a property.These reforms would hit online retailers such as Amazon and Asos and benefit smaller High Street and local retailers. "Business rates are the single biggest threat to the survival of retail businesses on the high street. Since the system was created the retail environment has changed beyond all recognition," the committee's Chairman Adrian Bailey. "A system of business taxation based on physical property is simply no longer appropriate in an increasingly online retail world."British Property Federation Chief Executive Liz Peace added: "If you were to look at the turnover per pound of business rate paid in a little high-street shop compared with an Asos warehouse or something like that, it would be fundamentally different."The committee also suggested the retail sector is given a different system of business taxation from other businesses. Currently the same business rates are paid on most non-domestic properties including shops, offices and warehouses.It also called for an interim 2% cap on increases in business rates until the government executes a more fundamental reform. Prime Minister David Cameron has added his voice to calls for a "fundamental reform" and business leaders are in agreement. Recently ex-Tesco boss Sir Terry Leahy criticised business rates an "ancient tax" that "has not worked for years".The British Retail Consortium welcomed the report and Director General Helen Dickinson said: "This report must be the final nail in the coffin of the question: do business rates need to be reformed?""They do. Business thinks so. A committee of parliament thinks so. We very much hope the government will think so too."OH