Andy Burnham’s proposal to cut business rates for pubs, clubs and music venues by 20 per cent through a new warehouse levy has drawn criticism from retailers.
They warn the policy could place a heavier tax burden on traditional businesses rather than online operators.
The Greater Manchester mayor has promoted the measure as a way to revive Britain’s struggling high streets, telling LBC last week that “the high street really needs to get more of our attention.”
But industry figures have questioned whether the plan would achieve its stated aim, with one retail chief executive describing it as “a rearranging of the deckchairs, rather than actually tackling why business rates need to be changed.”
Mr Burnham has said the levy would target “online tech companies and their warehouses.”
However, analysis by tax specialists Ryan suggests the proposal may not raise enough revenue to fund the promised reduction in business rates.
The firm found that only 1,900 large warehouses across England currently pay the highest business rates tier, making them the most likely properties to face higher charges.
Of those sites, just 129 are operated by purely online retailers.
Ryan said that even doubling the highest business rates charged on warehouses would not generate sufficient revenue to fund a twenty per cent reduction for pubs, clubs and music venues.
Retail boss warns Andy Burnham’s warehouse tax plan would ‘crucify the supermarkets’
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The findings indicate that limiting the levy to online retailers would affect only a small proportion of the warehouse sector, with most of the affected properties belonging to retailers that also operate physical stores.
The analysis has prompted concerns that a future Government could instead rely on existing legislation allowing a surcharge on around seventeen thousand of Britain’s largest and most valuable commercial properties.
Such an approach would extend the higher tax burden to supermarkets and department stores as well as online retailers.
Alex Probyn, practice leader on property tax at Ryan, said: “Maximising the existing surcharge could generate approximately one point three two billion pounds of additional annual revenue without introducing an entirely new tax.”
Supermarkets have previously opposed similar proposals
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Supermarkets have previously argued that higher business rates would ultimately increase prices for consumers as retailers continue to face rising costs, including higher national insurance contributions.
A Ftse 100 retail chief executive said: “Such a move would crucify the supermarkets because they operate on thin margins as it is.
“It will just feed straight into price inflation.”
British Retail Consortium chief executive Helen Dickinson said: “Andy Burnham is right to focus on high street regeneration but it’s unclear how it will work in practice.”
Robert Taylor, head of research at real estate adviser DTRE, said the proposal overlooked the importance of warehouses to modern retail operations.
“The irony is that the warehouse is the engine of the modern high street including for the independent retailers this policy wants to help,” he said.
Mr Taylor questioned whether increasing taxes on one of the commercial property sector’s strongest performing assets to subsidise another represented the right approach.
“Everyone wants a thriving high street but I question whether this is the mechanism to deliver it.”
The 10 most valuable warehouses in Britain include sites operated by Next, Lidl, Tesco, John Lewis, Sports Direct and Marks and Spencer, alongside three Amazon facilities.