EDITOR’S COMMENT So, there you have it. It would be “completely irresponsible” to abolish a tax that raises £25bn a year.
Chancellor of the exchequer Rishi Sunak has spelt it out, loud and clear. Whatever arguments the industry may have for a proper reform of the business rates regime have fallen on deaf ears.
“We on this side of the House are clear that reckless, unfunded promises to abolish a tax which raises £25bn every year are completely irresponsible,” he said. “It would be wrong to find £25bn in extra borrowing, cuts to public services, or tax rises elsewhere, so we will retain business rates.”
There is no way that any government – Tory, Labour or whatever else might be out there – is ever going to turn down such an easy money-spinner. Even if they promised to.
And that is especially true for a chancellor who loves the drama of a Budget announcement in which he can talk about the dent he’s making in the UK’s debt.
An easy, valuable tax is never going to be abolished. Ever.
I have no doubt, however, that this will be the end of calls for a reform. This government will say it has reformed business rates and that it should be celebrated as the saviour of the high street.
That is, of course, complete bunkum. The so-called “reforms” are either re‑hashed announcements, or so niche that they barely cause a dent.
Cries of 90% of businesses will have an up to 50% reduction in their rates may well sound great for the audiences in the Commons and the layperson, but the promised reduction is only on rates of up to £110,000 and means the big brands will not benefit from the reduction.
And while the relief for improvements may sound, momentarily, like a good thing, does this chancellor think that building improvements only impact the valuation of a property for one year? A 12-month relief means nothing, really.
Those who are impacted by the rates regime will have heard a different message from Sunak. When he said he would deliver “key reforms to ease the burden and create stronger high streets”, those in the sector would have heard “blah blah blah” or, in the words of Vivienne King, chair of the Shopkeeper’s Campaign, betrayal.
“This so-called fundamental review of the business rates has failed to produce any meaningful reform,” she said. “Ministers have not even engaged with it.”
I understand the betrayal, and I understand the industry’s tireless fight for the reform of business rates. But King has hit the nail on the head as to why reform is never seen through. Ministers won’t engage with it. They can’t engage with it. Why on earth would they want to engage with it?
£25bn in tax every single year. It would be political suicide for them to engage with it.
I would never dare suggest that the industry gives up its battle, but perhaps a change of approach is required.
While it may be “completely irresponsible” to deny £25bn of annual tax income, surely it would be “completely responsible” to find a way to increase that level of income through a fairer system? A levelling up, perhaps, of the tax regime.
Perhaps now is the time for the sector to talk less about reform and abolition and more about a fair and more valuable system.
Wordplay, as anyone who watches the pantomime of the Budget will know, speaks volumes.
To send feedback, e-mail samantha.mcclary@eg.co.uk or tweet @samanthamcclary or @EGPropertyNews
