Why should landlords have lower tax bills?

If the underlying truth to a matter is misunderstood then we’re going to end up with bad to terrible policy on that matter. Thus it is important that all understand who really pays, who carries the economic burden, of business rates:

Business rates, a tax levied on commercial property occupiers, have created an uneven playing field between bricks-and-mortar chains and their online competitors, helping to drive a slew of high street chains to the wall. Since the onset of the pandemic, Laura Ashley, Cath Kidston, Monsoon Accessorize, Paperchase and Edinburgh Woollen Mill empire have all fallen into administration. The collapse of Debenhams, often an anchor tenant in shopping centres, will damage the prospects of other businesses around it.

“It’s a double crime because we are letting online businesses like Asos and Boohoo out-compete rivals by not paying as much tax — and when they kill their competitors, the creditors, which includes HM Revenue & Customs, pick up the tab for that too,” said former Sainsbury’s chief executive Justin King, who now sits on the board of Marks & Spencer. “It would be funny if it wasn’t so serious.”

It is true that the occupier hands over the cheque for the rates. But the person who carries the economic burden is the landlord, they can charge a lower rent because of the existence of the tax. This is as close as our current tax system gets to a land value tax and is, in fact, a good tax. Good here meaning both efficient and equitable, rather than it being good to have to tax, that’s a cost given that we’ve got to pay for government somehow.

So, the current argument, the one being made against business rates, is that landlords should pay less tax and the shareholders, workers and possibly customers of online retailers should pay more.

It’s possible that that is true, not that we think so, but that is the argument that is being made and is the case that has to be proved.

So, before anyone signs up to this change in taxation methods there’s the big question that needs to be answered.

Why should landlords pay less tax?