Massive 177 PER CENT rates hike could leave your high street a deserted ghost town with shops facing financial ruin
Small business groups believe tax hike could affect some 500,000 shops in Britain with London boroughs of Islington and Hackney seeing 46% rise
HIGH Street shop owners fear being left in financial ruin as the government considers increasing business rates in towns and cities across Britain.
In April a revaluation is taking place, a process that happens every five years, and changes business rates to reflect price rises and falls in the property market.
The Federation of Small Businesses says that around 500,000 shops would see a rate rise and explained that the increased financial burden could lead to some High Streets becoming ghost towns.
Craig Beaumont, a spokesperson from the FSB, said: “You could see a whole series of towns and villages losing the heart of their business communities.”
He explained that it was “fast becoming untenable to run a small business in some areas of the country” as they are also faced with increasing labour costs and possibly new government taxes.
RELATED STORIES
London is expected to see an average rise of 11% across the city but that growth areas such as Islington and Hackney could see rises as high as 46%.
The reported that towns and villages outside of London could also become victims of their own success with shops in Southwold, Suffolk, facing an average increase of 177%.
However, the reality could be even worse for those businesses as the figure does not take into account the tax rebate many small shops currently enjoy.
Some 900,000 small businesses are likely to see a reduction in their business rate but Beaumont said the tax itself needed reform.
He explained: “The whole premise of the tax is that it is a business property tax and that's a real problem because it doesn't match what's happening in the economy.”
He added: “A business on the high street tends to have low profit and a large space in a prime location which means they pay more while shops like Amazon and Asos get away with paying a lower rate of tax because they aren't placed in a prime location.”
The government have already agreed to remove 600,000 of the smallest businesses from the business rates system but many in the sector are angered by the fact huge international sellers like Amazon will see a rate fall.
Helen Dickinson, chief Executive of the British Retail Consortium, also agreed that the tax needed reform.
She told The Sun Online: “The business rates system is no longer fit for purpose in the 21st century … Reform of the business rates system must address head on the need to reduce the burden of property taxes which are higher than in any other developed country.
“Retailers pay £2.30 in business rates for every £1 in corporation tax. Over the next three years to 2020, retailers will be paying £2bn more than they did in the previous three years.”
She added: “It is at odds with the government's aspiration for a low tax economy and closing the productivity gap between the UK and the rest of the world.”
Dr Adam Marshall, director general of the British Chambers of Commerce, was of the same opinion and told The Sun Online: “The business rates system isn't working - and is hitting thousands of businesses like a sledgehammer.
“The government has an opportunity to lessen the blow and they must use the upcoming Spring Budget to do so.
“The government's policy of fiscal neutrality means there are winners and losers from every marginal reform, what is needed is fundamental change to the system.”
Beaumont said another headache for small businesses is that they now have to pay a fee if they want to appeal against a business rate rise with over a million appeals lodged since 2010 - a third of which are still ongoing.
He said: “It's a totally rigged system and we think we can get that ruled illegal so we are trying our best to get ministers to recognise the problem and change it.”
Beaumont said businesses would likely respond to a rate rise by trying to absorb some of it, cut down on costs such as training, passing some of it onto customers and letting staff go.
He said it was possible for local communities to be turned into ghost towns as local businesses fail and high street shops left as empty units.
“Local business communities are now under threat, their business rates are going up, the appeal system to stop it is getting harder and you will see businesses shutting down and moving out of certain areas.
“These will include small towns, market towns as well as areas within London itself.”
We pay for your stories! Do you have a story for The Sun Online news team? Email us at [email protected] or call 0207 782 4368.