The business rates system has come under a fresh wave of attacks after two of the biggest supermarkets in the UK called it ‘medieval’, not only that but they also levelled criticism at the UK Government for not doing nearly enough when it comes to reforming. 

Business rates are due to go under an extensive evaluation in April, the first of its kind for eight years. It means that retailers are likely to have to come up with £2.25 billion over the course of the next five years. It is exactly that statistic that many are warning against, with retailers stating that the property tax will not only threaten smaller businesses but also stand in the way of any potential investment. It’s an opinion shared by the chairman of Morrisons, Andy Higginson who stated that business rates were nothing more than a ‘medieval tax’ and suggested that they were well past their sell by date.

The chief executive of Sainsbury’s, Mike Coupe joined the fight against the current business rates, arguing that they are no longer reflective of the world we live in. Coupe believes that business rates should be replaced with something that is far more up to date, citing the fact that Sainsbury’s paid more in business rates than corporation tax.

Higginson believes that the problem stems from the Government. Since business rates are in essence an extremely easy tax to collect, the Government has so far resisted reforming them. Both Sainsbury’s and Morrisons are hoping that the Government recognises what they see as an urgent need for reform and back retail by announcing sweeping changes to business rates after April’s evaluation.

Although the two supermarket giants have rallied against business rates, a study conducted by CVS actually showed that some of the UK’s largest supermarkets would actually benefit from a reduction of just under £40m in their rates bills every year. That reduction would amount to £200m over the course of the next five years. Despite that projection, the supermarkets would still prefer a rates system that took more of their current challenges into account. Whether or not the Government will listen to their concerns remains to be seen.

CVS went on to prophesize that major supermarkets like Morrisons and Sainsbury’s as well as Tesco and Asda would benefit from having less tax imposed on them this year. Their projections state that the tax will reduce from £1.51 billion to £1.47 billion.

Sainsbury’s by grassrootsgroundswell licensed under Creative commons 4