Why the reform on business rates has been rejected by government

A lot of salons and barbershops feel business rates are an unfair and outdated tax on ‘bricks and mortar’ businesses. However despite the NHF calling for a reform, a business rates reform has been rejected by government. The fact that online retailers pay so little in business rates feels unfair. Against a backdrop of rising labour costs and falling consumer confidence, high street retailers pay over £7bn in business rates each year, whereas online companies pay only £457m between them. Salons and barbershops feel penalised for having high street and town centre properties, which are no longer the desirable, prime locations they once were.  While the number of barbershops and beauty salons are on the rise, the disappearance of so many household names from the high street means footfall in town centres has dropped by 17% over the last 10 years. However in a letter to MPs the Chancellor Philip Hammond said there was “no consensus on an alternative base” for calculating rates bills but he did acknowledge that the government needs “to find a better way of taxing the digital economy”. Philip said he would not examine the issue of business rates until he has considered reforms to other corporate taxes.  The chair of the Treasury Select Committee, Nicky Morgan, announced that business rates would come under further scrutiny ahead of the autumn budget inquiry, saying the committee was “increasingly concerned with the financial burden that business rates are placing on high street businesses.” In its response to a recent inquiry by the Housing, Communities and Local Government Committee on high streets and town centres in 2030, the NHF once again called for action on business rates after survey findings revealed that 42% of members had seen their business rates increase following last year’s revaluation. NHF chief executive, Hilary Hall said: “Salons and barbershops are the backbone of the high street. We risk losing their strong community presence because of so many rising costs, including business rates. We urge the government to come up with a business tax system which is fair to both ‘bricks and mortar’ premises and online retailers.”