The British Retail Consortium (BRC) has warned that retailers will face a huge hike in business rates next year because they claim the Government has ignored their calls to move to a fairer and more predictable system for calculating bills.
Anticipating the expected announcement that next April’s business rates increases will be based on last September’s 4.6% RPI inflation, the (BRC) warned it will lead to much higher costs than stores can afford and risks undermining the sector’s ability to protect and create jobs.
It could also add significant inflationary pressure - alongside the increase in VAT in January, the weakness of the pound and rising commodity costs - which is likely to feed through to prices for customers. Add to this the fact that many traders have suffered from late deliveries and lower sales due severe weather conditions and it all begins to look very gloomy indeed.
Commercial property taxes for England and Wales are currently worked out using September’s Retail Price Index (RPI), with the new charges introduced the following April.
For future years, the BRC is calling for an alternative approach for which stores could budget more easily. Options include using the Consumer Price Index (CPI), which is used to calculate pensions, or calculating a 12-month average RPI to iron out volatility in the monthly figures.
Stephen Robertson, British Retail Consortium Director General, said, “It’s deeply disappointing that the Government is ploughing on with an excessive increase in business rates based on one random month’s inflation figure. Against a background of public sector job losses, falling consumer confidence and weak sales, there is a danger this will drive up inflation, hitting customers in the pocket.
“An increase on this scale will be a body-blow for many retailers, undermining their ability to maintain and create jobs. For the future, the Government must move away from this discredited business rates roulette to a fairer, more predictable formula.
“Linking the increase to the CPI measure or using an annual inflation average would give businesses the confidence they need to plan and invest, and make it easier for retailers to keep prices down.”
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