British Retail Consortium: Shops Should Pay Energy Tax and Not Business Rates

UK retailers should be taxed based on their energy consumption thus sparing them from Britain's crippling business rates system, according to the British Retail Consortium.

"We have a once in a generation chance to fundamentally change the business rates system and the time is right to think creatively and in the best long term economic interests of the UK," said Helen Dickinson, director general of the BRC.

The BRC report called the Road to Reform proposes changing the basis for tax to items such as energy use, simplifying the revaluation system and giving retailers a discount rate based on the success of the enterprise and the jobs that it has created.

Business rates are the highest in Europe in the UK: retailers pay around 10% of business taxation while only representing 6% of GDP, stated the report.

For every £1 ($1.67, €1.22) in corporation tax, retailers pay £2.31 in business rates.

The situation is reaching chronic proportions as 14% of all shops across the country lie vacant; every 1% of vacancy accounts for 50,000 jobs.

Furthermore, 50% of high street leases come up for renewal in the next three years but are not likely to be renewed.

Dickinson said: "These potential options would be good for the public, the economy and businesses small and large, while still providing significant tax revenues for the Government.

"We now intend to analyse each one in more detail and very much hope that we will stimulate discussion that goes beyond tinkering with the existing system."

John Rogers, chief financial officer of Sainsbury's who chaired a retail group backing the BRC scheme, said: "The current system is outdated and cumbersome and does nothing to encourage retailers to invest.

"We believe we can do better for business and for tax payers and these options represent tangible progress in the debate on what reform could look like if we think about retail in the future, rather than the past."