Retail leaders in the UK have expressed their disappointment with the government’s interim review of business rates, stating that it does not offer anything new. The report, which was released on Wednesday, has faced criticism for not providing a clear stance on whether there will be a significant reduction in business rates later this year when the Treasury publishes its final review. Moreover, there is uncertainty surrounding the potential introduction of an online sales tax.

The interim report, which spans 33 pages, summarizes feedback from 487 industry players following last year’s evidence gathering. It encompasses various proposals and suggestions from businesses ahead of a comprehensive review of the business rates system. This upcoming review will outline the government’s reform priorities and its long-term vision for the system.

Colliers, a property expert, expressed disappointment with the review, stating that it was hoping for fresh insights but found that the report merely reiterated what has already been said for years. John Webber, Head of Business Rates at Colliers, criticized the lack of indication of further action on business rates until the autumn, describing it as a missed opportunity for the government to tackle the issue.

Jerry Schurder, Head of Business Rates at Gerald Eve, also criticized the report for not providing any new perspective on the government’s thinking. He viewed it as a demonstration of government inaction and a disregard for previous reviews and inquiries on the topic.

Physical retail leaders have long been advocating for a significant change in business rates, arguing that online retailers enjoy an unfair advantage. The advantage has been further exacerbated by the pandemic as physical stores were compelled to close, prompting consumers to shift their purchases online.

Within the review, respondents welcomed the possibility of an online sales tax as a means to level the playing field between online retailers and brick-and-mortar businesses that pay business rates for their properties. While it was acknowledged that an online sales tax is unlikely to completely replace business rates due to the revenue they generate, some participants supported the idea of using the tax revenue to reduce business rates.

However, concerns were raised about the potential impact of such a tax on consumers, particularly low-income households, as it could lead to higher prices. Some suggested that an online sales tax could contribute to the revitalization of the high street and provide support for local communities and tourism.

The report also mentioned the possibility of a “delivery tax” as an alternative to an online sales tax. The Treasury is reportedly considering two types of online retail tax: a 2% levy on all goods purchased online and a tax on consumer deliveries.

Jace Tyrrell, CEO of New West End Company, called for all online sales, including retail, travel, software, and services, to be taxed. He argued that a 2% tax rise on all online sales could generate £14 billion per year, which could be used to significantly reduce business rates.

In conclusion, the interim review of business rates has faced criticism from retail leaders for not presenting new insights or a clear stance on key issues. The need for a fairer playing field between physical and online retailers remains a pressing concern, with discussions surrounding the possibility of an online sales tax. The government is urged to take action based on the findings of the review to address the challenges related to business rates and provide support to the retail industry.