The Treasury is facing a backlash from businesses amid a delay to an overhaul of the outdated business rates system that blamed for mass shop closures.
Businesses had hoped that the Government s response to a small review of business rates would be announced with the budget on October 27, but Rishi Sunak is now expected to announce fundamental changes, a delay first reported by The Daily Telegraph.
Business rates are a property tax linked to the underlying value of commercial premises. Present rates are based on properties values from 2015, which do not reflect a sharp decline in the value of high street shops and shopping centres after the rise of online shopping and the effect of Covid - 19. The tax has no relation to the trading performance of a shop and penalise bricks and mortar outlets over online retailers.
Business groups with nine million employees say that delaying reform will risk further shop closures and undermines the potential to invest in priority such as carbon emissions reduction.
Rain Newton-Smith, the CBI s chief economist, said: With up to half of business investment potentially subject to business rates, it has literally become a tax on investment. If the government is serious about achieving its net-zero ambitions, kicking more reforms into the long grass cannot be the answer. The British Retail Consortium said that 80 per cent of brick and mortar stores would close without reform.
A Treasury spokeswoman said: We are currently conducting a review of business rates, which will end in the autumn. She brought a 16 billion support package for retail, leisure and hospitality businesses during the pandemic. The scheme entices a 15 month waiver of business rates for eligible businesses and includes a further 66 per cent discount to eligible businesses until March 2022.
She said that the government was committed to supporting investment by the tax system, citing the chancellor's super deduction tax break for plant and machinery.
Ian Fletcher, director of policy at the British Property Federation, said there would be considerable disappointment if the government did not set out its stall on business rates reform.
Business rates raise for the Treasury each year, after reliefs in England. The government promised a review in 2019 and said that this review would continue until then. In the same year, Sunak was involved in a Treasury Committee inquiry into the system.