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Retailers have called on the Chancellor to extend Covid-era help and then make permanent reforms that level the playing field.
The High Street faces a £2.5bn rise in business rates which threatens to devastate pubs and shops unless Rachel Reeves intervenes.
This is the stark warning from both the British Retail Consortium (BRC) and UK Hospitality, who are calling for urgent action in Wednesday’s budget.
Business rates are a tax based on the value of a commercial property, meaning stores pay a premium compared to online giants like Amazon.
The two organizations called on the Chancellor (pictured) to extend Covid-era aid and then make permanent reforms that would level the playing field.
With the relief, all hospitality and retail businesses have reduced their bill by 75 percent. But from April next year, their bills will rise to £11bn, forcing many to raise prices or close.
The High Street will go from paying 34% of all rates this year to 44% in 2025, despite representing just 9% of the economy, according to the BRC and UK Hospitality report.
They argue that this is unfair, since online companies do not have to shell out as much for their huge warehouses.
Kate Nicholls, chief executive of the UK hospitality sector, said: “High street businesses paying a third of all business rates is absurd and one of the main reasons we see our businesses facing financial challenges – managing a pub, bar, cafe or restaurant is to name a few, incredibly expensive.’
Reducing the burden of tariffs could “free up millions in investment from new places into more jobs” and save local communities from “countless closures”, he added.
Echoing this, BRC chief executive Helen Dickinson said: “Consumers want diverse and thriving high streets, but this is being held back by the failed business rates system.”
He called rates “the biggest barrier” to retailers investing in new stores and jobs.
High Street employers want a permanent lower rate to be used to calculate how much businesses should pay, meaning lower bills.
It is a major fear alongside potential tax rises, including raising the rate of employers’ national insurance contributions and Deputy Prime Minister Angela Rayner’s plan for workers’ rights.
The latest plea came just a day after Marks & Spencer boss Stuart Machin warned against rising business taxes. He said: “It might improve public finances in the short term, but it hinders economic recovery and harms our customers and colleagues who are still struggling with the cost of living.”
The Labor Party has promised reforms, saying the system “disincentivises investment, creates uncertainty and places an undue burden on our high streets”.
In its manifesto, the party promised to “replace the business rates system, so we can raise the same revenue but in a fairer way”.
But businesses worry the reforms are too little, too late in the face of shutdowns.
The brewers also sounded the alarm. The British Beer and Pub Association warned it faced “a raft of punitive new rules and costs, which could spell the end for many businesses and jobs”.
Chris Jowsey, boss of Admiral Taverns, argued that tax rises would “simply fuel inflation, meaning customers will pay more to socialise”.
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