Retailers face £175 million business rates bill if next year's increase is based on RPI
The British Retail Consortium has warned that if next years business rates increase is based on Septembers Retail Price Index measure of inflation then retailers will be hit with £175 million in extra costs.
The Office for National Statistics announced today that that the RPI fell to 2.6% in September down from 2.9% in August.
However, the BRC said that the retail industry, with its large amounts of property across the UK, already pays 28% of all business rates and would be hit disproportionately hard by a corresponding 2.6% rise in business rates next April.
The organisation is arguing that business rates have already increased "significantly" in both 2011 and 2012 with rises by 4.6% and 5.6% respectively, making a cumulative increase of more than £0.5 billion.
Through its Fair Rates for Retail campaign, the BRC is calling on the government to freeze business rates in 2013 in order to support jobs and growth during tough trading conditions. It is also asking the government to honour its commitment to review the mechanism for setting rates increases, and to introduce a fairer, more sustainable formula for the future. The BRC favours basing business rates increases on an annual average of the Consumer Price Index, rather than the taking only September's RPI.
BRC director Stephen Robertson said: "This RPI announcement reveals the scale of the potential damage to our high streets that will follow if the Government follows previous practice and translates it directly into next April's rates increase.
"The retail industry is the UK's biggest private sector employer, providing crucial first jobs to a million 16-24 -year-olds. Expecting retailers to bear a huge rates hike for the third year running can only lead to fewer chances of work, less investment and more troubled high streets.
"The government must recognise that retail has already contributed its fair share to the Exchequer and freeze business rates in 2013. It also needs to reform the mechanism for setting future increases so that it is fairer and less volatile."
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