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Why do people want to reduce the tax on landlords?

Summary:
The campaign to reduce business rates trundles on. The question we’re asking ourselves is why does anyone - other than landlords of course - want to reduce the tax upon landlords? While competition in Britain's retail sector is strong, bricks-and-mortar retailers say they are subject to an unfairly high burden from business rates, which are based on a property's estimated value on the rental market and can run to millions of pounds a year for department stores in prominent spots. Internet-only rivals such as Amazon rely instead on vast out-of-town warehouses in low-cost areas and pay much lower rates as a result.It’s true that business rates are incident upon the cashflow of those retailers. But in the end it is rents which are lowered, not retailers’ profits or gross margins.The entire

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The campaign to reduce business rates trundles on. The question we’re asking ourselves is why does anyone - other than landlords of course - want to reduce the tax upon landlords?

While competition in Britain's retail sector is strong, bricks-and-mortar retailers say they are subject to an unfairly high burden from business rates, which are based on a property's estimated value on the rental market and can run to millions of pounds a year for department stores in prominent spots.

Internet-only rivals such as Amazon rely instead on vast out-of-town warehouses in low-cost areas and pay much lower rates as a result.

It’s true that business rates are incident upon the cashflow of those retailers. But in the end it is rents which are lowered, not retailers’ profits or gross margins.

The entire campaign therefore is an attempt to lower the taxation rate of landlords. Why is this something that anyone at all, other than those landlords, wishes to achieve?

All of which is an interesting example of why politics is such a lousy manner of running things. Decisions are made not just as a result of who has the political power to male them but on the basis of clear and evident untruths. Retailers don’t carry the burden of business rates yet they are to be cut to alleviate the burden upon those retailers.

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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