British finance minister Rishi Sunak scrapped business rates for small firms in an “exceptional step” to help them deal with the disruption caused by the outbreak of coronavirus, Trend reports with reference to Reuters.
The announcement came hours after the Bank of England cut interest rates, saying it had acted after seeing a “sharp fall” in trading conditions in the last week, particularly in the retail sector and anything driven by discretionary spending.
Business rates, a particular burden for retailers, are taxes to help pay for local services, charged on most commercial properties. They are currently calculated according to the value of a property and have an annual inflationary uplift, or multiplier.
“Our (party political) manifesto promised that for shops, cinemas, restaurants, and music venues with a rateable value of less than 51,000 pounds ($65,943) we would increase their business rates retail discount to 50%,” Sunak told parliament as he delivered the annual budget.
“Today I can go further and take the exceptional step for this coming year of abolishing their business rates altogether.”
Britain’s retail sector has for years complained that the current business rates system was unfair and needed reform.
Lobby group, the British Retail Consortium (BRC), points out that the industry is the largest private sector employer in Britain, employing about three million people. While it accounts for 5% of the UK economy, it is burdened with 10% of all business taxes, and 25% of business rates.
The BRC argues this disparity is damaging Britain’s high streets and harming the communities they support.