Andy Burnham, the new Labour MP for Makerfield, is being urged to introduce a two per cent tax on all online sales to fund a 37 per cent cut in business rates for bricks-and-mortar firms. The call comes from the newly formed Real Rates Reform Alliance, a coalition of business groups demanding a complete overhaul of Britain's business rates system.
Coalition Demands Fairer Tax System
The Real Rates Reform Alliance argues that the current property tax is “broken and unsustainable” and wants it replaced with a new “hybrid” system to level the playing field for high street businesses. The coalition estimates that digital firms currently pay only nine per cent of total business rates, despite accounting for a fifth of economic activity. In contrast, retail and hospitality firms contribute 34 per cent of business rates but make up only about nine per cent of the UK economy.
Burnham Urged to Go Further
Ros Morgan, chief executive of Heart of London Business Alliance and chair of the Real Rates Reform Alliance, said: “Business rates should support growth, not hold it back. Andy Burnham has already acknowledged the current system isn’t fair and talked about levelling the playing field between online and some physical businesses. We want him to go further.”
Morgan added: “By bringing together a broad coalition of business organisations behind a practical, credible solution, we want to work with Government to seize the opportunity of lasting reform that protects high streets, supports investment and creates a fairer tax system for the modern economy.”
Institute of Directors Backs Reform
Anna Leach, chief economist at the Institute of Directors, said “the time has come for fundamental reform.” The coalition's proposal includes a two per cent online sales tax to fund a significant reduction in business rates for physical retailers, aiming to ease the strain on high street businesses.
