- Britain to re-evaluate commercial properties from April 2023
- Support means bills will rise by less than 1% – government
- Business welcomes help, says more reforms needed
LONDON, Nov 17 (Reuters) – Britain will provide 13.6 billion pounds ($16.1 billion) of support to retail, hospitality and leisure companies facing higher business bills next year, to help them weather the recession and falling consumer spending.
British businesses have complained for years that corporate rates – a property tax charged on most commercial properties to fund local services – are archaic and give an unfair cost advantage to online retailers like Amazon (AMZN .OR).
Handing over his budget to parliament, Hunt said he would proceed with a planned re-evaluation of company properties from April 2023 which could lead to higher corporate rates for some. But he said he would provide temporary support to limit the impact of rising inflation.
“I will soften the blow to business with a tax cut of almost £14bn over the next five years. Nearly two-thirds of properties will not pay a penny more next year and thousands of pubs, restaurants and small high street shops will benefit.” . he said.
The package means the total increase in corporate rate bills will be less than 1%, compared with more than 20% without intervention, the finance ministry said.
The British Retail Consortium, UKHospitality and the British Beer and Pub Association (BBPA) have welcomed the relief but said more radical changes are still needed.
“The fact remains that the current system is outdated and not fit for purpose. The government has made a manifest commitment to radical and branch overhaul and it is essential that this (is) delivered as soon as possible,” said Kate Nicholls, CEO by UK Hospitality. .
The trade body warned last month that more than a third of the industry was at risk of bankruptcy early next year due to rising energy costs and rising cost of goods.
Britons too are facing a bleak economic outlook. With inflation at a 41-year high of 11.1% and consumer confidence nearing its gloomiest level on record, they are cutting back.
The UK’s budget comptroller said rising prices would further erode people’s wages and reduce living standards by 7% by April 2024.
The government also said it had decided not to introduce an online sales tax, which some companies are demanding in conjunction with corporate rate reform.
That decision, which he said reflected concerns raised about the complexity of the proposed tax and the risk of unfair outcomes between different business models, was criticized by the brewing industry’s BBPA.
“It seems the government doesn’t recognize the completely archaic nature of the current system,” said CEO Emma McClarkin.
($1 = 0.8463 pounds)
Reporting by James Davey; editing by Alistair Smout and Jane Merriman
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