The waiving of business rates for the retail and leisure and hospitality sectors from 20 March has been a key factor in the survival of many High Street businesses but if they are to survive rates need to be reduced immediately and the Chancellor needs to review business taxation generally.
Retailers currently pay 25% of all rates paid by UK businesses (£7,625m 2018/19). Reshuffling the pack, and in particular asking operators working out of warehouses and logistic centres to pay more, would be welcomed by many on the High Street as it would help ‘level the playing field’, but online businesses will not be able to take on all of the rates liability paid by retailers.
Reform of the rates system must be combined with an overhaul of the whole business taxation regime. Taxes from other sources are essential to top-up the reduction in rates paid by businesses.
The easiest changes to implement would be an increase in VAT. If 2% were added to VAT receipts by HM Revenue & Customs it would generate £20 billion, enough to fund significant reductions in the High Street rates bills.
The Government need not restrict themselves to one measure. An online sales tax would help shop keepers on the High Street be more competitive. A carbon tax charged to businesses whose carbon footprint is above a certain level would also raise money and encourage businesses to become more carbon efficient.
Vans criss-cross our towns and villages delivering a multitude of parcels every day. If the road tax for these delivery vehicles was increased to £5,000 per van, and the cost of this were passed onto consumers, then the number of orders placed, and journeys made would be reduced.
It would encourage consumers to use local shops more frequently, this would significantly reduce local pollution – and, combined with a carbon tax, help the UK achieve our 2050 carbon net zero target.
There is an opportunity here for the Government to make a huge difference to the future of our High Streets and the environment in which we live by making major changes to our business taxes, but there needs to be some real creative thinking, which up until now has been lacking.