A new report out, insisting that it's landlords, not retailers, who bear the majority of the burden of business rates:
Business rates hurt landlords more than retailers, a new report has claimed, and reducing the burden of the levy could generate 4,000 new jobs and up to £1.75bn-worth of development in the sector over the next five years. Landlords are unable to invest in new real estate as a result, the study claimed, and increases in business rates have led to the country missing out on £670m of new development, and 6,000 fewer jobs over the past three years.
That report is here:
The report, launched today by the British Property Federation, (BPF), British Council of Shopping Centres (BCSC) and British Council for Offices (BCO), written by Regeneris Consulting, has revealed that over a period of two to three years, approximately three quarters of any increase in business rates is transferred to landlords as occupiers push for lower rents.
In other words, business rates limit the rents that landlord are able to charge to their occupiers. This reduces the potential level of new real estate investments that they can make and reduces the amount of new commercial property development. However, not all of the cost of rising rates is passed on to landlords, with approximately 25% being borne by occupiers.
They're entirely right, this is just terrible news. And it's such terrible news that they're also correct in their insistence that we must change the system.
We don't want landlords to carry 75% of the burden of business rates at all, we insist that they should carry 100% of it. We also don't want to tax the value of development at all, just the value of the land which is affected by the other developments around it.
That is, business rates are a crude proxy for a land value tax and as a crude proxy they're not quite good enough. What we want instead is a proper land value tax, one that taxes the undeveloped value of that specific plot of land, that value being determined by all the other development that has taken place around it. What is actually developed upon that plot should not be taxed in the slightest. In that manner the retailer, the occupier, will not be bearing any of the cost of the rates, the developer will not be yet the landlord of the land itself will be carrying the full burden.
Which is how it should be. So, we must thank the landlords for bringing this appalling state of affairs to our attention. They're only carrying 75% of the burden when it should be 100%. Change the system now, revolution!