BRC business rate reform proposals criticised

Want to buy this photo?

Paul Turner-Mitchell

Local retailer and business rates reform campaigner Paul Turner-Mitchell disagrees with the latest reform plans being set out by the British Retail Consortium (BRC) after their latest report revealed proposals to completely reform the UK business rates policy.

The BRC believes that the rates system has been left behind when other taxes have been modernised, therefore leaving the business rates system out of date - this much Mr Turner-Mitchell agrees with, however, the BRC has outlined four different options to reform business rates, none of which find favour with Mr Turner-Mitchell:

• Shifting the basis for taxing property by replacing the current system with a tax based on other measures, for example, energy usage.
• Rewarding employment by delivering a discount to the business rates bill based on a given value per employee, capped at an overall proportion of company rates bill.
• Supporting successful businesses by providing a discount to the business rates bill based on a percentage of Corporation Tax payment, capped at overall proportion of company rates bill.
• Modernising the existing system by introducing a simplified, banded revaluation system, with revaluations on a more regular basis.

Mr Turner Mitchell, who undertook a study of business rates for last year's Grimsey Review, said: "I am not surprised to see the BRC turning their backs on the need for more frequent revaluations, which is something that is desperately needed. Our research revealed that the big four supermarkets have saved £1.3billion as a result of the revaluation being postponed. As a result, small businesses will be effectively subsidising the likes of Tesco, Asda, Sainsbury's and Morrisons in 2015 and 2016."

Commenting on the BRC's proposed business rates reform options, Bill Grimsey said: “It would be wrong to change the current system to a tax based on energy usage without extensive consultation with British manufacturing, as this would hit them hard.”
 
He added: "This is a report that is written for the big four supermarkets by one of the big four supermarkets and the main beneficiaries will undoubtedly be the big four supermarkets. It is not the way to carry out reform of our business rates system. It is quite clear looking at some of their recommendations that they're devising a policy to cut their bills. If we were to calculate business rates on the number of employees a company has or as a percentage of their corporation tax then the supermarkets will be the big winners.

"The best way to inject a measure of fairness back into an outdated system is to immediately carry out the business rates revaluation that this Government postponed. Our research showed that retailers in England outside London would have saved £233million in 2015 and 2016 if this revaluation had gone ahead."

John Rogers, Chief Financial Officer, for J Sainsbury and the man responsible for chairing the group of executives leading the project for the BRC said: “The current system is outdated and cumbersome and does nothing to encourage retailers to invest. We believe we can do better for business and for tax payers and these options represent tangible progress in the debate on what reform could look like if we think about retail in the future, rather than the past.”

The BRC recently published ‘The Road to Reform,’ 'a range of ground breaking ideas for the complete reform of the UK business rates system' in collaboration with Ernst and Young.