(1 week, 6 days ago)
Public Bill CommitteesQ
Rachel Kelly: Our whole economy is interconnected. Those large logistics and distribution warehouses that you talk about will be servicing parts of our retail sector as well. I am sure there will be loads of impacts of this measure that are impossible to predict at this point, but ultimately, increasing the tax rate further makes investment in property harder, and it will make the occupation of property more expensive. Other than that, it is good that the whole economy is shouldering the burden of the higher tax rate, and we would not want that to be intensified further so that individual sectors are solely bearing that burden; I do not think that would be right or sustainable. Ultimately, the higher tax rate will make the tax system less competitive and the occupation of property more expensive.
Q
Rachel Kelly: Yes and no. Ultimately, if you take a step back, business rates are a tax on the occupation of property, and they are levied on the basis of the value of that property. If you occupy a more valuable property, you will pay more tax. The business rate system is working as the policy intended in that respect.
In terms of making it fairer, the best thing you can do is value property more frequently. Retail rents have been falling for the last 10 or 15 years. In the decade from 2010 to 2020, rents came down 30%, but business rates did not for that sector. Rents are negotiable—rents do respond—but it is business rates that do not. If valuations had kept up with rents, retail would have been paying much less, much earlier, and other sectors that had been growing would have been paying more much more quickly. To my mind, the best way to introduce fairness into the system is to value properties more frequently.