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BRC demands rates freeze and VAT cut extension

The British Retail Consortium (BRC) is calling on the government to freeze business rates and delay returning VAT to 17.5% to assist under-pressure retailers through the recession.

The BRC wants plans to increase business rates called off and the reinstatement of empty property rate relief, claiming that the new rates will increase retailers costs by 30%.

Retailers are facing a rate hike of 5% in April because the rates were calculated on the Retail Price Index from last September. They have since dropped from 5% to 0.1% but this is not taken into account.

The BRC said that retailers paid around a quarter of all business rates costs despite representing only 8% of GDP.

Last week Arcadia owner Sir Philip Green met with ministers John Healy and Angela Eagle to seet postponement or cancellation of the 5% rise. Marks & Spencer, Debenhams and New Look are also backing Green’s attempt.

BRC director general Stephen Robertson said: “Proposed property tax changes, such as the revaluation of business rates, could see retailers’ property costs increase to £7 billion by 2010/11. The additional burden is equivalent to the average salaries of over 100,000 retail employees.”

“Property is one of retailing’s biggest costs, alongside our people. There is a real danger that these government-imposed costs will result in more empty high street stores and further job losses. Business rates must be frozen at 2008 levels.”

The BRC also said that the return of the VAT rate to 17.5% should be delayed by at least a month, from the current planned date of December 31 2009.

The BRC said that it was the “worst possible time of year” to reverse last year’s VAT cut from 17.5% to 15% as December was the busiest period for most retailers.

It added that it cost the retail sector around £90 million to implement last year’s cut and that it would cost a similar amount to reinstate the original 17.5% rate.

Robertson said: “Retailing is facing the toughest trading conditions in decades, with predictions of 15% of shops closing and up to 200,000 job losses.”

“Retailers don’t want handouts, but we can’t cope with increasing government-imposed handicaps. Retailing is at the heart of every local community, providing one in nine UK jobs. The government must work with us to protect these jobs and promote new opportunities.”






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