The Treasury is coming under pressure from Esther McVey to overhaul business rates tax and replace it with a fairer system whereby monies paid is based on turnover.
Chancellor Rishi Sunak suspended business rates for the current financial year as part of his package of support to help businesses survive the pandemic.
The Tatton MP said now was time to change the archaic taxation and replace it with a system whereby tax paid reflects turnover, meaning everyone would pay a fair share regardless of where their business or warehouse was based.
Ms McVey said: “For too long businesses on our high streets have been disproportionately affected by business rates. Many online retailers can operate from wherever they want to secure the cheapest rents and business rates so overhaling the system would create a level playing field and allow all businesses to thrive.
“The Chancellor was right to suspended business rates for a year but this pandemic is still very much impacting on businesses and we need to think about what will happen come next April. Businesses already struggling will then be hit with huge bills but profits and sales may still be down on pre pandemic levels so one solution would be to do away with the current system and replace it with the percentage tax on sales.”
Ms McVey’s suggestion would see each business, regardless of where it was based, pay a percentage based on sales, meaning smaller shops with lower turnover would pay significantly less than stores taking large sums of money. It would run alongside the current VAT which would remain unchanged and the money would be paid to the Treasury and redistributed to local authorities in the same way business rates are.
A recent business survey carried out by Ms McVey distributed across Knutsford, Wilmslow, Alderley Edge, Rudheath and Handforth showed business owners were unanimous in their concern over the strain business rates were putting on them.
Ms McVey added: “I have raised the concerns of business owners across the constituency with the Chancellor and it is clear from the responses I received action is needed. I am sure the views of my business owners will be mirrored across the country and Government must listen.”.”
Business rates are calculated by rental value of the property meaning bricks and mortar businesses in prime locations like the high street often have astronomically higher rent than online businesses who can manage stock from hold warehouses out of town or in the cheapest locations they can find. Revaluations take place every five years.