Retailers want tax aid to beat crunch

Retailers have urged the Government to freeze new business rate burdens and reinstate tax relief for empty property, as the beleaguered sector faces a £1bn-plus hike in property costs from controversial legislation.

The British Retail Consortium (BRC) said annual increases, business rates revaluation, loss of empty property tax relief and new business rate supplements could add £1.6bn to the £5.45bn in rates paid by retailers in the last financial year. The second reading of the controversial Business Rate Supplements Bill is due to take place today.

Stephen Robertson, director general of the BRC, said: "Many retailers are struggling with a triple whammy of falling sales, crushed margins and rising costs. The Government must revise plans for extra burdens, which can only destroy more of the UK's three million retail jobs. We don't expect handouts but we don't want more handicaps." The BRC salvo against the Government comes ahead of tomorrow's publication of what are expected to be weak retail sales for December.

According to the BRC, retail is more dependent on property than other sectors and therefore is more exposed and sensitive to property cost increases.

In November, Sir Terry Leahy, the chief executive of Tesco, which is announcing its sales figures for Christmas tomorrow, also called on the Government to review how business rates are calculated, to help retailers invest during the downturn. Sir Terry said: "They [business rates] do not reflect the changing nature of businesses, with the value of property no longer providing a reasonable indicator of profitability."

The BRC urged the Government to take four steps to help struggling retailers. It demanded the reintroduction of 50 per cent tax relief on empty property, which was abolished in April 2008 and costs retailers £115m a year. Second, the BRC said the Government should not implement any business rate increase – which, based on last September's 17-year high retail prices index of 5 per cent, would force retailers to pay an extra £250m from April.

Third, the Government should postpone its business rates revaluation – which will use April 2008 rental values as the basis for business rates from April 2010 – until stability returns to the property market. Finally, the BRC demanded the Government puts safeguards in place, including a compulsory business vote, before any new business rate supplement is introduced. Local authorities are to be given the power from April 2010 to charge a business supplement in addition to existing business rates.