Home Economics As Lord Wolfson Should Know, Business Rates Are A Self-Solving Problem

As Lord Wolfson Should Know, Business Rates Are A Self-Solving Problem

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Self-solving problems are those we don’t need to do anything about. They are, quite naturally and without intervention, going to sort themselves out without requiring any intervention. This is so of business rates. Something Lord Wolfson, of Next, should know. For he is, after all, a clever chap:

In Wolfson’s view, there will still be a place for physical stores even as footfall dwindles. But he believes property owners and ministers have a part to play in keeping the high street alive.

“The future of retail is going to be driven by three things,” he says.

“Most important will be consumers. At the end of the day if consumers don’t want to shop in shops, they don’t. Secondly, landlords. As landlords continue to be as pragmatic in determining rents going forward, that will allow shops to stay open. And thirdly, we do need some form of settlement on business rates [reform].”

Leave aside that economic point that rates are in fact incident upon the landlord, not the tenant. Let us continue with the assumption that this difficult truth is not in fact so.

How are rates determined?

Business rates are worked out based on your property’s ‘rateable value’.

This is its open market rental value on 1 April 2015, based on an estimate by the Valuation Office Agency (VOA).

You can estimate your business rates by multiplying the rateable value by the correct ‘multiplier’ (an amount set by central government).

So, as rents fall – given that landlords are being more realistic – so do business rates fall. It is not necessary to change the system in the slightest that is.

Which is, of course, good. Given that the economic point about incidence is actually true. Rates are a tax upon landlords and why shouldn’t we be taxing rentiers?

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4 COMMENTS

  1. Business rates may indeed fix themselves (although the mechanism is not free from interference), but that alone won’t save the High Street. There is still the council, buggering things up without suffering the consequences. Parking*, prohibited traffic, dirty streets, homeless sleepers, all the things that make it tedious to go into towns in general and some towns in particular.

    * Lack of spaces, high charges and inapropriate charging methods, where you have to rush back to the car because of a deadline set when you bought the ticket.

  2. Ironically, it’s because business rates go to Whitehall instead of the Town Hall that local councils are insulated from the effects of their buggeration of the High Street. That has circular effects in that the council has no NBR income, so tries to get income elsewhere, such as charging for parking and access, which restricts access to the businesses, the negative results of which do not impact on the council – other than fewer parking fees. So they charge more for parking….

    In the Before Time if the local council killed off its local businesses that local council would be killing off its own tax base. The only reform Non-Domestic Rates needs is for all of it to go to the local council and wrenched out of the maw of Whitehall.

  3. jgh, when you talk of the council now, you are talking about council employees, not actual councillors as in the before time, men who would have an interest in local prosperity and in getting re-elected. Council employees, nowadays actively despise any business which wants, needs or sets out to make a profit.

  4. Both of you – brilliant. Why the feck doesn’t anyone employed in a Council have a fecking clue?

    My suggestion: Because they have a job for life with a fantastic pension, and want to beggar ‘the rich’ to spend the money they have stolen on their own moronic schemes.

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