Credit:Matt Cardy/Getty Images/Matt Cardy/Getty Images
The system of business rates is outdated, and the hike to take effect in April would be deeply unfair. Official figures suggest that the Government will raise an extra £1 billion after revaluation. Why? This is a tax that makes no sense. The pain would not be felt evenly. Given that businesses are taxed on the basis of rent values, an archaic approach in a modern economy if ever there were one, some parts of the country will be hit harder than others. In London, where values have rocketed, retailers could face a 400 per cent increase over five years. Outside the capital rates could actually fall.
Crucially, this is not just about retailers: all businesses, small and large, that operate out of premises and that require space will be hit. Coffee shops, restaurants, schools, nurseries, hair dressers – all are being hammered when taxes should be falling, not increasing. A jump in rates translates into reduced profits. In an age when the digital revolution is transforming the way we shop, this is especially ridiculous. We don’t need policies that discriminate against town centres and smaller specialist retailers. In fact, business rates contradict other government policies to promote a revival of urban areas and villages and to encourage the growth of new services. The tax is also a tax on success. By hitting London and the South East more heavily, it is making our most competitive economic heartlands decisively less so.
Credit:Martin Divisek/Bloomberg/Martin Divisek/Bloomberg
Entrepreneurship, which is the motor of the British economy, is being penalised by the Treasury. Abandoned premises are being slowly filled by charity shops, which enjoy rates relief, discount stores and chains of mini-marts. This is changing the character of our high streets. Britain has to decide what kind of public space it wants – one that is full of thriving, locally owned shops and an array of service industries or one where no one bar a few charity shops can survive.
The Government insists the most vulnerable will be protected, but it must rethink this revaluation as a whole. As the country prepares for Brexit, the economy needs to be as lightly taxed and regulated as possible. At this time, more than any other, the Government ought to commit economic policy to the promotion of innovation and small business. Theresa May insists that she is the champion of those who are “just about managing”. Here is a chance to prove it.