The boss of Sainsbury’s has said the business rates tax system is “no longer fit for purpose” and warned that current planned increases will lead to thousands of high street closures and job losses. The UK’s second-largest supermarket chain also backed calls for a 20% cut in business rates for retail companies. Business rates are the property tax system for businesses, affecting sectors including retail, hospitality and leisure.
Labour has pledged to reform the current business rates system, committing to “levelling the playing field between high street and online retailers”. It has said the reforms will be revenue-neutral – meaning any reductions will need to be offset elsewhere in the tax system – but it is yet to reveal further details of how it will overhaul the tax system. Previous governments have also pledged to review and reform the business rates system, but it has still come under significant criticism from high street retail bosses.
Under the current system, business rates increased by around 6.7% in April for the current financial year and will rise next year by the UK CPI inflation rate for September. This year the retail industry saw business rates increase by around £1.
6 billion for UK companies. Sainsbury’s and the Usdaw union have called for increases to be suspended and the overall rates payments from retail to be cut by 20%. It said research, carried out by Development Economics, found that continued increases based on the current inflati.