Chancellor Philip Hammond has told MPs he will not reconsider business rates reform imminently, but will examine changing how digital firms are taxed.
In a letter to MPs, Hammond said that the business rates review which was conducted in 2016 was sufficient for the time being and that the issue would not be readdressed now, according to The Daily Mail.
In the letter to the Treasury Select Committee examining business rates, chaired by MP Nicky Morgan, Hammond said: “Respondents agreed that property-based taxes were easy to collect, difficult to avoid, relatively stable compared to other taxes and had a clear link with local authority spending.”
However, he did say that a review of how digital firms were taxed was under way and he would consider reform in this area as a result.
“It is right that we make further progress on this issue before considering the implications for the wider tax system, including business taxes, so that all businesses make a fair contribution to the public finances,” he said.
The committee has called on the Government to “urgently investigate” shortening the time between rate reviews.
Hammond’s response comes amid growing pressure to overhaul business rates.
The BRC called for a two-year freeze on rates rises earlier this week and the New West End Company has called for a revenue-based tax on online retailers to redress the balance between them and bricks-and-mortar retailers, which pay £8bn in business rates per year.
In a report commissioned to examine alternatives to business rates, New West End Company said a 1% tax on online businesses could raise more than £5bn and help to ease the burden on bricks and mortar-based retailers.
New West End said that last year Marks & Spencer paid £184m in business rates, on revenues of £9.6m. In contrast, New West End claimed that Amazon paid just £14m despite raking in UK revenues of £7.3bn.
Had the etail titan paid the same proportion of its sales in tax as M&S did, it would have contributed £140m to government coffers.
New West End Company said that in the coming weeks it would “urge the Chancellor to even the playing field for high street businesses” and called on him to introduce reforms as part of his Autumn Budget.
Sir Peter Rogers, chairman of New West End Company, said: “Business rates are currently the biggest tax that high street retailers pay, accounting for nearly half of retailers’ tax bill. The current structure of business rates, whereby they are linked to the value of occupied property, not economic performance, provides online retailers with an unfair advantage and a 90% rate discount in an already struggling bricks and mortar retail environment.
“London’s West End is a major contributor to the UK economy with retailers generating over £9bn in sales a year and employing over 80,000 people. If we do not act now we damage the ability of those business to survive and continue to drive our economy.”