In an article on The Telegraph’s website, Terry Duddy, chief executive of Home Retail Group, says that shopping has changed but the taxation, regulatory and planning framework for property-based retailers has not.
Shopping has changed, but the taxation, regulatory and planning framework for property-based retailers has not. We now operate in a multi-channel world of e-commerce, m-commerce, online and in-store trading. Tax and regulation, however, remains firmly stuck in the analogue age, said Mr Duddy.
Take business rates as an example. The Treasury has handed retailers a 3.2% rate hike for next year, based on September’s retail prices index (RPI) measure of inflation. This increases the tax burden on retailers by £242m from April 2014 and is the latest in a long series to hit the sector hard. Home Retail Group paid £150m in business rates last year – that’s 40% of its total property costs. The latest hike means that retailers will have to pay £3.44 in business rates for every £1 in corporation tax in 2014.
In terms of costs, the business rates system is the most important area that needs to be reformed when more than one in 10 UK shops are currently vacant. Yet the Government has delayed the revaluation of business rates from 2015 to 2017.
The retail industry makes a massive contribution to UK plc. In the FTSE 100 alone, just eight retailers are valued at more than £80b, which accounts for significant holdings in many investment funds and therefore has a direct bearing on the nation’s pensions.Taking another measure, the sector pays £17.5b of the four largest taxes: VAT, business rates, national insurance and income tax.
Mr Duddy concluded that despite the sector’s huge contribution to taxes, employment, product innovation and manufacturing, the attention and policy focus that is needed from the Government to help drive growth often appears lacking. Put simply, there is a clear need for a long-term strategy for the retail sector, which reflects a 21st century industry.
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