Thursday , January 23 2020
Home / Adam Smith Institute / Retail landlords should be paying much of the business rates bill

Retail landlords should be paying much of the business rates bill

Summary:
A complaint here which really doesn’t stand, is rather missing the point of the system:BRC chief executive Helen Dickinson said retailers had been scarred by the shift of sales online, prompting a wave of restructuring, as well as increasing caution among shoppers amid the uncertainty of a potential no-deal Brexit and a general election. Firms are also battling with high rent and business rates. Ms Dickinson called on the Conservatives to fulfil a pledge to cut rates, adding: “It is essential the new Government makes good on its promise to review, and then reform the broken business rates system."She said that 25pc of all rates are paid by retailers, even though they make up just 5pc of the economy.Tenants- and thus retailers - hand over the cash for business rates to be sure. But the

Topics:
Tim Worstall considers the following as important:

This could be interesting, too:

Tim Worstall writes Lady Nugee insists on lowering the top income tax rate

Wolf Richter writes The Great American Shale Oil & Gas Bust: Fracking Gushes Bankruptcies, Defaulted Debt, and Worthless Shares

David Stockman writes Apple Is Right to Refuse to Help the FBI Hack into iPhones

Tyler Durden writes Hunter Biden Ordered To Appear In Court Next Week For Contempt Hearing

A complaint here which really doesn’t stand, is rather missing the point of the system:

BRC chief executive Helen Dickinson said retailers had been scarred by the shift of sales online, prompting a wave of restructuring, as well as increasing caution among shoppers amid the uncertainty of a potential no-deal Brexit and a general election. Firms are also battling with high rent and business rates.

Ms Dickinson called on the Conservatives to fulfil a pledge to cut rates, adding: “It is essential the new Government makes good on its promise to review, and then reform the broken business rates system."

She said that 25pc of all rates are paid by retailers, even though they make up just 5pc of the economy.

Tenants- and thus retailers - hand over the cash for business rates to be sure. But the economic incidence is upon landlords. This is not well known but is well proven. Thus rates are a tax on landlords.

Which is what rates are supposed to be as well. Some people own land - and the tax feeds through to land itself - in locations where it has a lot of value. As the location of a piece of land is rather happenstance, so too is its value. This is thus a good thing for us to be taxing.

Retail is both the reason for those high values and also the major user of that high value land. So, landlords of retail properties is where a tax on high land values is going to fall. That such landlords pay that large portion of business rates is not a failing of the system it’s the point of it.

It is, obviously, possible to make the system better. Which we should do in fact given the confusion that the current system produces. Move the responsibility for handing over the cash from the tenant to the landlord. That’s where the economic incidence is anyway and thus nothing else will change. The total occupancy cost of any site will be just what it is today.

The advantage would be that no one would be able to obfuscate, as above, about the system. We’re trying to tax high land values, we are, and under such a system still would be. All we’d be getting rid of is the ability of retailers to bleat about it all.

Media enquiries: 07584 778207 (Call only, 24 hour)

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.

Leave a Reply

Your email address will not be published. Required fields are marked *