Business fears Rishi’s triple whammy of tax

Sunak’s Budget ‘will drive away vital investment’

CHANCELLOR Rishi Sunak is expected to outline reforms to business rates at his Budget on Wednesday, in order to protect retailers and leisure groups from being clobbered by the tax.

It is thought he will provide limited relief from the expected £1billion-plus increase in business rates due next year to retailers with physical stores and hospitality and leisure groups.

Additionally, he is tipped to say that there will be more frequent revaluations of the tax, to ensure it better reflects live property values.

The tax is blamed by many for hollowing out high streets. Retail and hospitality groups have benefited from a business rates holiday since the start of the pandemic, but the tax is being phased back in and the holiday will be removed entirely at the end of the financial year.

However business groups fear that Sunak will not go far enough, and want the property tax to be completely overhauled. John Webber, Head of Business

Rates at Colliers said that if the Chancellor “tinkers around the edges” with the tax, it will be “an affront to business and cost livelihoods and jobs”.

CBI director-general Tony Danker said: “Fundamental reform of business rates has been delayed too long,” and noted that the UK property tax is amongst the highest in advanced industrialised nations.

Sunak’s Budget overall is expected to outline how the Government needs to rein in spending and cut the national debt, which has spiralled due to Covid-19, and announce more revenue-generating measures. Those are expected to include an increase in capital gains tax, a windfall levy on companies that have benefited from rising energy prices, an online sales tax, and reducing the salary level at which students start to repay their loans.

Experts and business groups fear that a triple whammy of new taxes and increases will harm Britain’s ability to attract investment and further erode confidence. Chris Sanger, head of tax policy and partner at EY, said: “Sunak is coming into this Budget with businesses scarred, they have been hit twice, first by the increase in corporation tax, the second the social care levy.

“Business will look at the first and say fine, that’s down to Covid-19. The second is to fix a long-term problem.

“The worry is that if businesses are hit a third time, it’s a trend. The UK says it wants to attract investment but that is a strange statement when you’ve hit business three times.”

Danker said: “The Government wants to unlock business investment, but its tax policies do the opposite. You cannot will the ends and ignore the means to turbocharge the economy. Every economist and business leader knows it.”