Business rates reforms in the UK have fallen short of the promises made to the retail industry, according to the country’s largest retailers. Companies like M&S and Sainsbury’s are criticizing the government’s changes, arguing that they are only minor adjustments and that brick-and-mortar stores are still burdened with high taxes, particularly in town centers. Meanwhile, online businesses benefit from lower bills due to the way business rates are charged on physical properties.

These retailers claim that the government had promised to conduct a “fundamental” review of the business rates system, but the reforms implemented so far have been inadequate. They argue that the current tax is negatively impacting local economies and stifling investment. Stuart Machin, the CEO of M&S, highlights the disproportionate burden faced by physical stores, pointing out that they contribute slightly over 5% of the economy but pay nearly a quarter of business rates. Machin believes that this tax cannot continue in its current form, as it is hindering investment, driving up prices, and damaging the retail industry.

On the other hand, the government maintains that it has provided significant support for businesses through business rates relief and that its reforms have helped level the playing field between brick-and-mortar stores and online retail. Chancellor Jeremy Hunt was praised last year for providing £13.6 billion in business rates support to companies. However, the British Retail Consortium argues that these measures are insufficient and that the business rates system remains flawed, negatively impacting investment, jobs, and town centers.

There is a clear disconnect between the retailers’ expectations and the government’s actions regarding business rates reform. The retail industry is calling for more decisive action to protect businesses, stimulate job creation, attract customers back to physical stores, and support local communities. The current system is seen as unfair and outdated, with physical stores bearing a disproportionate tax burden compared to online retailers. It remains to be seen whether the government will listen to these concerns and implement more substantial reforms to address the issues raised by the retail industry.

Useful links:
1. Introduction to Business Rates
2. Retail Industry Demands Action on Business Rates