British retailers in plea for permanent business rates cut

Some of Britain's biggest retailers including Tesco and bookstore Waterstones have urged the government to permanently cut business rates if it wants physical stores to survive in the age of mass online shopping.

Britain's retail sector has for years complained that the business rates system, charged on most commercial properties, is archaic and hands an unfair cost advantage to online retailers such as Amazon.

With the pandemic driving the growth of online sales even further, the retailers, which also include Kingfisher and supermarkets Asda and Morrisons, said business rates could hamper any recovery and destroy thousands of jobs.

The rates, which help fund local services, were halted at the start of the pandemic but are due to restart in April.

"Reducing business rates for retailers and rebalancing the tax system to ensure online retailers pay a fair share of tax would be revenue-neutral, provide a vital boost to bricks and mortar retailers and support communities in need of levelling up," the letter says.

Business rates, a particular burden for retailers, are calculated according to the rentable value of properties. Supermarkets initially benefited from the freeze on business rates but paid it back after performing strongly during the pandemic.

Prior to the pandemic, business rates' share of total tax receipts was about 4%, according to government data. Last March, finance minister Rishi Sunak promised a "fundamental review".

In a letter to Sunak, published on Monday ahead of his March 3 budget statement, the CEOs of 18 retail and property groups argue that failure to reform the business rates system will hamper the recovery of the retail sector after the COVID-19 pandemic, potentially putting thousands more jobs at risk.

In recent months several major clothing retailers have collapsed, with their brands then bought by online-only groups which do not need to hire the thousands of staff that once ran the shops.

While the letter does not explicitly call for the introduction of an online sales levy, Tesco, Britain's biggest retailer, has previously called for one.