The Booksellers Association of the United Kingdom & Ireland Limited

Chancellor’s announcement welcome, but tax system has to change further - says BA

30/10/2018

Business Rates

Delivering the annual Budget Statement, the Chancellor pledged £900 million in business rates’ relief and a dedicated sum of £650 million to rejuvenate high streets and their transport links.

“We are very pleased that following the representations made by The Booksellers Association and others, many of our smaller booksellers could well see a reduction in their business rates.  We wrote literally thousands of letters to those we thought could influence the outcome (see the table following) and met Ministers to put forward our views.  We are grateful to all of our members who made their own representations to their MP/MSP/AM/MLA, and also to Baroness Rebuck and Lord Bird in particular, who lobbied extensively in the House of Lords to secure an improvement for booksellers”. - Tim Godfray, Executive Chairman of the BA, commented.

“It is good to see the Chancellor showing support for the High Street by imposing a new Digital Services Tax on the very big technology companies that have a competitive fiscal advantage over physical businesses when paying Business Rates. Amazon has massively distorted our market place, so we will need to read the small print carefully to ascertain how far the playing field might be made more level by this development”.  - Meryl Halls, Managing Director of the BA said.

Business Rates’ Reductions for SMEs
The Treasury said its new Business Rates’ Relief, targeted at small retailers, could knock a third off their Rates’ bills.  To qualify as a small retailer, business premises must have a rateable value of £51,000 or less.

“Mr Hammond did say in his Statement that he believed this development would benefit 90% of independent companies, cutting the rates’ bill potentially by as much as £8,000.  Where these powers are devolved, in Scotland and Wales, we very much hope the devolved parliaments will follow suit.” - Meryl Halls commented.

Non-SMEs
“But”, said Halls:  “Our larger shops are still hammered by this iniquitous Business Rates’ system, and the Government needs also as a matter of urgency to reduce their burden as well.  Those bookshops over the £51,000 threshold will consider it arbitrary and unfair to be cut off from assistance. The Business Rates’ tax system has to change further:  welcome though these interim measures are, it is currently not fit for purpose”.

Digital Services Tax
“It was heartening to hear the Chancellor saying clearly that the big technology companies were not paying their fair share of tax and that this was unsustainable.  As we understand the proposal, the new Digital Services Tax will apply to UK revenues of the big technology companies that have global sales of more than £500m.  It is not an online sales tax.  The Government hopes to raise some £400m from this measure.  We will have to see how our main competitor, Amazon, is affected by this proposal.  The devil will be in the detail.  Mr Hammond said ideally he would have preferred to secure a global agreement with other tax authorities to create new measures for the tech companies, but he admitted progress is already painfully slow.  What is frustrating to us is that this new Digital Services Tax will not kick in until April 2020, giving the tech companies a further period of competitive fiscal advantage”. - Giles Clifton, BA’s Head of Corporate Affairs, commented. 

The BA has argued for many years that the current system of taxation is out of date, discredited and heavily weighted against bricks and mortar retailers, who are paying £2.30 on average in Business Rates for every £1 paid in Corporation Tax. We already know that the Waterstone’s on the Bedford High Street is paying something like seventeen times more in Business Rates than Amazon are paying for their enormous warehouse just down the road. This deeply unfair system must end. 

Government support for High Streets

“It was pleasing to hear the Chancellor stating clearly that our High Streets lie at the heart of many communities.  We welcome the £650m now allocated over four years to help local government rejuvenate high streets.  High street regeneration has to move up the government’s agenda if we are to have a thriving retail sector, which employs an enormous number of UK citizens and which, moreover, provides a diverse ecosystem where entrepreneurship and creativity can thrive.  High streets matter to the UK economy and to the UK’s cultural landscape”. - Meryl Halls said.