Labour Business Rates Plan: Call to Reveal Detailed Plan

The Labour party has shared their intention to revitalize high streets with a new strategy, which includes revising business rates and increasing the penalties for shoplifting.

They have suggested replacing the current business rates with a “business property taxation,” aiming to create a fairer competition between physical stores and online retailers.

Yet, when asked for specific details about this new taxation method, Labour has not provided any substantial information. John Webber, who is in charge of business rates at Colliers, finds this lack of detail concerning, especially since the General Election is just a half year away, and Labour could soon be in power.

Business rates currently generate £30 billion annually and are crucial for funding local services. The prevailing opinion among experts is that the system is overdue for change, as businesses face a 55% tax rate due to the current multiplier being 54.6p per pound.

Webber points out that in comparison to Europe, where businesses pay substantially less in property taxes, the high taxation rate in the UK is unsustainable for continued business growth and investment. He blames the failing high street and retail sectors on the current business rates system.

He notes that while consecutive Conservative governments have failed to deliver on promises of reform, making the ratepayer’s burden heavier, Labour’s aspirations to revitalize high streets are meaningless without concrete details of their plans.

Labour has assured that their reforms will not financially harm public services or local authorities. Regarding potential actions by Labour, Colliers speculates:

Land Value Tax: One idea is a tax based on land and rental values, which Colliers doubts will be effective as it would likely fall on the landlords. The business rates system was designed to have businesses contribute to the local services they use, and shifting this burden solely onto landlords could lead to higher rents for businesses, potentially causing more disputes rather than solving issues.

Digital Services Tax: Labour has proposed redirecting some tax burden from high street retailers to online companies like Amazon and Facebook with a £3 billion tax. However, this plan was shelved due to fears of a U.S. trade conflict. Other related proposals, like aiding small businesses by increasing the threshold for small business rate relief, might also be rethought if they depended on an increased digital services tax rate.

Empty Property Relief: Labour suggests a trial of a “new shops bonus,” which would grant new shop owners a three-month business rates holiday after ensuring their business is viable. This proposal is criticized because it reallocates funds from a relief that currently benefits landlords and does not consider that landlords often wait a year for tenants, so imposing rates on empty properties won’t speed up this process.

Webber stresses the need for a reformed business rates system with a lower multiplier and simplification, not complete abolition or a land value tax.

He also emphasizes how Labour’s vague policy is causing uncertainty for businesses, underlining the need for detailed information so that businesses can make informed decisions about investments. Webber insists Labour must provide clarity on their policy to aid business planning, including for high street owners and tenants, or else they will face continued scrutiny.

Labour urged to come clean on its business rates strategy