Can we at least get the basics about business rates right?

This is something of a forlorn hope for clearly we cannot manage to get the basics about business rates correct. A pity, for there's quite clearly something between a groundswell and a deliberate campaign going on concerning the subject. 

Yes, it's entirely true that expensive retail properties pay more business rates than sheds around the back. But everything else that is being said is wrong:

The popular villain of the UK piece is business rates, the property-based tax that raises £29bn a year for the Treasury, of which retailers cough up £8bn. It isn’t the only culprit, but the complaint from bricks-and-mortar shopkeepers is essentially correct: business rates were invented in a pre-internet age and the system is archaic. A useful tax system would help to reverse the damage done to high streets from the 1980s by sprawling out-of-town retail parks. Instead business rates, as currently structured, add to the problem.

The thing wrong here is that the taxes aren't actually paid by the retailers or tenants. Sure, they hand over the cheque but everyone is up to date with the idea of tax incidence. Certainly, the government and those writing newspaper business editorials must be otherwise we'd be having the ignorant in those important positions, wouldn't we?

The price people are willing to pay to have that shopfront gaining that footfall traffic is that price. It's set by the willingness to cough up for the limited supply of it. How that is divided into rent to the landlord and tax to the government makes no difference to that demand for it nor the price willingly offered by tenants and potential such. The landlord is deeply interested of course - reduce the tax burden and their portion of that total price, their rent, rises. We have an empirical test of this, when business rates were reduced or abolished in enterprise zones rents rose in tandem. 

A reduction in business rates will lead to - ceteris paribus - rent rises. Or perhaps, given the excess of retail property at present, smaller falls in rent than would otherwise occur. A reduction in rates thus would benefit landlords and a reasonable assumption would be that the groundswell, or deliberate campaign, is being driven by such and their interests.

There is a further point:

The most startling statistic was provided by the New West End Company, an alliance of central London retailers, hoteliers and property owners. It calculated that Marks & Spencer, a company with a turnover of £9.6bn last year, paid £184m in business rates, whereas Amazon, with slightly smaller revenues in the UK of £7.3bn, paid substantially less in rates – just £14m. Amazon, of course, operates from more lightly taxed warehouses and requires fewer properties. New West End calculated that a 1% sales tax on online businesses could raise more than £5bn, which could go some way to levelling the retail playing field.

Rates are a tax upon the use of a scarce resource, that expensive property. If someone has worked out a way to economise on the use of an expensive input then why would we want to tax them to confiscate their greater efficiency? It's as if we decide to tax the cyclist because they're not using enough petrol.

Rates are incident upon the landlord, not the tenant, and we don't want to tax people using less property to supply desires anyway. Once we do all agree upon those two facts then, and only then, can we start to have a reasonable and informative conversation upon what, if anything, we're going to do about business rates. Roll on the day we get informed politics, eh?

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