With the general election only a few days away all the main parties have remarked on business rates, although what will they do should they win the election?
As we commented recently, it has been Labour’s intention for some years to replace business rates. Their manifesto has reiterated this, saying that the current system “disincentives investment, creates uncertainty and places undue burden on high streets”.
No detail has been given of what Labour’s new system entails, although they have stated that it will raise the same revenue but in a “fairer way” and will also “level the playing field between the high street and online giants, better incentivise investment, tackle empty properties and support entrepreneurship”. It has been suggested that to redress the perceived imbalance between online and high street retail, RV bands could be introduced whereby occupiers receive a percentage discount on their rates bill depending on property size.
The Conservative manifesto mainly refers to the government’s £4.3bn support package, including action for the creative sector and what they will continue to do for high street, leisure and hospitality . They have suggested increasing the multiplier for distribution warehouses supporting online sales, whilst the Liberal Democrats continue to favour a Land Value Tax.
Business rates continues to be a sensitive issue for many sectors of commerce, particularly retail and hospitality that resonates well with voters. This is perhaps why all the main parties have addressed the issue in their manifestos, although why do they lack detail?
Our view is formed upon the 2019 parliamentary inquiry into the future of business rates. They are an incredibly resilient tax that is cost effective to administer with a 99% collection rate. Wholesale change, or a switch to a totally different type of tax is inherently risky and will jeopardise the annual revenue worth £26bn. No government in the current climate can afford to take such a risk, therefore, whoever wins the election will have limited room for manoeuvre and any change will be minor.
