The British Retail Consortium (BRC) has laid out ideas including linking business rates to energy use and scrapping it as a property tax as it pushes for reform of the burdensome existing system.
The BRC floated the idea that the Government could put into force a new, energy-related business rates charge which works alongside the existing energy efficiency tax, the Climate Change Levy, and would help drive economic growth.
The thinking is that it would encourage retailers to reduce the amount of business rates they pay by reducing the amount of energy they use.
BRC director general Helen Dickinson said: “We’re thinking outside the box.”
It is the first for four options unveiled today as part of work the BRC is conducting with adviser EY to find a way to reform excessive business rates while incentivising businesses.
Sainsbury’s chief financial officer John Rogers, who is heading the project, said that the energy option should help drive economic growth in the way the Government’s reduction of corporation tax has.
Rogers said: “We are making sure that whatever reform might look like that it is beneficial [to businesses].”
Energy is the preferred option and the most transformative of four ideas unveiled. But Rogers said he will do more work, to be published in May, to thrash out whether the ideas would match the £25bn revenue the Treasury currently generates from business rates.
He said that that the aim is to make the business rates system fairer across the board because retail “punches above its weight” - it pays £7bn in business rates and accounts for about 5% of the UK’s GDP.
Another option would be for the Government to reward businesses depending on the number of staff they employ by offering a discount for each employee, and a third option would offer businesses a rates discount dependent on the UK business paying corporation tax in this country.
The fourth idea is to modernise the existing system through a banding approach which would enable revaluations to take place as often as annually, creating a more accurate database than the current five-year revaluation process allows.
Rogers added that the final option should be used in conjunction with two and three. “Option four clearly addresses Government concerns of an administrative burden on its own but it is not the option we want them to go down. We want greater reform than suggested just by modernising the current system,” he added.
Retailers have been up in arms over the excessive business rates charges they have had to pay over recent years which they say has put further financial pressure on the sector and restricted business growth and job creation.