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The nation’s being gaslit over business rates

Summary:
It is a standard economic analysis that it is landlords who carry the burden of business rates, not tenants. There are libraries packed with proofs of this, Henry George is by no means the only person to have noted it. Yet we have continued insistences from tenants that they must be freed from the burden of having to pay such business rates. Why?In a letter to Rishi Sunak, the Chancellor, 21 business figures from companies including MossBros and The Entertainer said that action is vital to prevent a disaster.Mr Sunak is expected to announce the delayed results of a review of the rates system in autumn, with speculation growing that it could be unveiled in his Budget later this month.The property tax has long been derided as an outdated measure that penalises bricks and mortar stores at the

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It is a standard economic analysis that it is landlords who carry the burden of business rates, not tenants. There are libraries packed with proofs of this, Henry George is by no means the only person to have noted it.

Yet we have continued insistences from tenants that they must be freed from the burden of having to pay such business rates. Why?

In a letter to Rishi Sunak, the Chancellor, 21 business figures from companies including MossBros and The Entertainer said that action is vital to prevent a disaster.

Mr Sunak is expected to announce the delayed results of a review of the rates system in autumn, with speculation growing that it could be unveiled in his Budget later this month.

The property tax has long been derided as an outdated measure that penalises bricks and mortar stores at the expense of online rivals which have warehouses in cheaper out of town locations.

The letter said: “There are many views on precisely how the business rates system should be reformed, but on this we are all united: the current business rates system is broken and there must now be fundamental change.

“If there is no genuine reform of the business rates system, the occupation of commercial premises is going to become unaffordable to more businesses.

"There will be more bankruptcies of well-known retail brands, more retrenchment by retailers which do survive, more closures of hospitality venues, more boarded-up shops, fewer start-ups and whole shopping centres abandoned. Many communities are being hit hard, with thousands of jobs being lost each year.”

It’s certainly a stirring call. Despite the fact that it is entirely and wholly wrong. Any reduction in rates would flow through as higher rents to landlords. We even have empirical proof of this, from the changes in business rates in Enterprise Zones those decades back.

So, why are we all being gaslit in this manner?

Melanie Leech, of the British Property Federation, helped organise the letter

BPF, who are they?

The British Property Federation is the voice of the real estate industry in the UK. Our membership reflects the diverse nature of our industry – owners, developers, funders, agents and advisers.

Ah, the insistence upon the change now makes sense. Of course the landlords will be against a system of taxation that bites into their rents. Why the rest of us should take a blind bit of notice of this self-dealing is the question that needs answering now.

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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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