The excessive level of business rates is preventing retailers from expanding in the UK, according to regional shopping centre owner Intu.
It said the multiplier used by the government to calculate business rates, which currently stands a 49% of a property’s rateable value, is now at an extreme level in terms of economic impact on companies’ ability or willingness to invest and grow in the UK retail sector.
It gave the example of corporation tax, which has been reduced from 34% in 1990 to 20% today, while the business rates multiplier has increased by 35% to 49% over the same period.
Intu owns and manages shopping centres in both the UK and Spain and said that government revenues from taxes on property as a percentage of GDP is over 4% in the UK, around 2% in Spain, and the OECD average is 1.8%.
“We are not opposed to the principle of a property tax but the excessive level is making the UK less competitive and less attractive for retail investment,” said David Fischel, chief executive of Intu. “It means that when considering expansion plans, international retailers are more likely to open overseas than expand throughout the UK meaning that the regions outside of London are particularly hard hit by the high levels of business rates.”
Intu also said it supports the government’s initiative to devolve additional powers to major regions outside of London, but warned that this could be jeopardised without a thorough reform of business rates.
In its evidence submission, the shopping centre owner and manager has made a number of other recommendations including more frequent revaluations of rateable values, improved use of technology, a move away from the link to RPI. It also agreed with recommendations of other parties in relation to empty rates and the process of transitional relief.