Property tax threatens retailers

A series of new property tax increases threatens to harm retailers' ability to support the millions of jobs they provide. From the 1st of April several property tax hikes, such as business rates revaluation, come into effect, and the British Retail Consortium (BRC) said the Government must reappraise the costs they are burdening businesses with and only introduce affordable increases.

Business rates are the equivalent of council tax for companies. Every five years rateable values, based on how much it would cost to rent commercial properties, are recalculated and used to work out business rates bills. This April's revaluation will result in a substantial rise in many retailers' property costs.

Business rates also face an annual inflationary increase based on the previous September's retail price index (RPI) measure of inflation. 2008 saw the highest September RPI figure for over 10 years, causing an inflation-busting rise in last year's business rate bills. Firms were allowed to defer part of 2009's hefty increase to this April and many retailers will have to deal with these demands as well as extra costs due to revaluation.

Another property tax demand starting this April is the Business Rate Supplement (BRS), introduced in London to pay for Crossrail. The Mayor decided to levy the maximum possible increase he could, resulting in a five per cent rise in business rate bills for the affected properties.

Stephen Robertson, British Retail Consortium Director General, said: "Retailing is responsible for nearly three million jobs in the UK. As property costs are a major overhead for retailers, any significant increase will limit their ability to create and maintain jobs.

"Retailers already pay a quarter of the £24 billion in business rates in England – more than any other sector. April's property tax hikes, including business rates revaluation, will hinder retailers' vital role in contributing to the recovery.

"We supported the announcement in the Budget to give the smallest shops a year's business rates holiday, but there was no help for larger retailers. Property taxes should be made affordable for all retailers – regardless of their size.

"And we need compulsory business ballots to prevent Business Rates Supplements being abused by local authorities and a full restoration of rates relief on all empty properties."

Image: Borough high street