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London’s West End retailers call for online tax to solve business rate inequality

New West End Company, the organisation that represents over 600 retailers, hoteliers and property owners in London’s West End, has urged the Government to implement a business rate reform plan which its says would eliminate the inequality that exists between high street and online retailers.


London’s West End retailers call for online tax to solve business rate inequality

The organisation has called for the introduction of a revenue based tax to replace business rates for online businesses. Its figures suggest that a 1% tax placed on online business revenues could raise £5 billion each year with the sum being used to cut business rates by an average 17.5% at no cost to the Treasury.

According to the British Retail Consortium, retailers account for 6% of GDP but pay 26% of business rates. In addition, New West End Company's figures show that last year’s rates revaluation saw business rates for West End stores rise by an average of 80%, with some shops experiencing an increase of over 130%.

The new proposals, which come from a report commissioned by New West End Company from Arup and local government expert Professor Tony Travers, recommend replacing business rates with a revenue based tax for businesses that are wholly or largely online.

New West End Company said high street retailers, restaurants and bars, which typically use larger store spaces in prime locations, would benefit most from the new proposals. The new tax would apply only to businesses that are wholly or largely online so that high street retailers with a strong online presence would not be taxed twice.

Sir Peter Rogers, chairman of New West End Company, said: “Business rates are currently the biggest tax that high street retailers pay, accounting for nearly half [45%] of retailers tax bill. The current structure of business rates, whereby they are linked to the value of occupied property, not economic performance, provides online retailers with an unfair advantage and a 90% rate discount in an already struggling bricks and mortar retail environment."

He added: “London’s West End is a major contributor to the UK economy with retailers generating over £9 billion in sales a year and employing over 80,000 people, if we do not act now we damage the ability of those business to survive and continue to drive our economy.” 

During the next few months, New West End Company, whose members include Selfridges, Marks and Spencer and Fenwick’s, will ask the Chancellor to consider the proposal in his Autumn Budget.


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