The British Retail Consortium (BRC) has responded to the latest Consumer Price Index (CPI) figures, which show a 1.7% increase in prices.
The BRC revealed that retailers will have to pay out an extra £137 million in business rates come April.
“Already, while retail accounts for 5% of the economy, its pays a massive 25% of all business rates,” the BRC’s Property Policy Advisor Dominic Curran said: “This £137 million increase will reduce the ability of retailers to invest in their business, their staff and their shops. The Chancellor must take action on rates in the forthcoming Budget and scrap ‘downwards transition’, which takes £1.3 billion from retailers and uses most of it to subsidise rates in other industries.
“Meanwhile, with the retail industry facing store closures and jobs losses, the Government should freeze the impending business rates increase.”
Downwards transition refers to when the revaluation of the annual rental value of a property results in a business needing to pay less tax, but is not automatically change to the correct level. Instead, they will be slowly ‘downwards transitioned’ and the money generated used to stagger the rate of increase for businesses that need to pay more.
According to the BRC, the effect of this is to essentially take £1.3 billion from retailers who are overpaying, and give back only £.06 billion to those who are ‘underpaying’.
The consortium went on to explain business rates are paid regardless of the profitability of a business or its ability to pay a tax and the rate has risen over time to be ‘unsustainable’.
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