The Labour party plans to scrap business rates and hike the rate of the new digital services tax to build a level playing field between high street shops and online stores, Shadow Chancellor Rachel Reeves told delegates at the Labour conference on 27 September 2021.
Referring to a recent study by the British Retail Consortium that found four out of five retailers face closure without a reduction in business rates, Reeves called on the Government to freeze the tax for next year.
It should also give all SMEs a business rate discount next year and increase the threshold at which businesses would qualify for business rates relief, she said, adding:
"To pay for those measures, the Government should increase the digital services tax (from 2%) to 12%."
The Government is currently analysing answers it received from a call for evidence as part of its business rates review, which is due to be published in autumn 2021.
During the pandemic, business rates were frozen between 1 April 2020 and 30 June 2021 and are currently charged at 33% of what they usually would be until 31 March 2022, after which point the tax on non-domestic properties will revert to pre-pandemic rates.
Mike Cherry, national chair of the Federation of Small Businesses, said:
"The Shadow Chancellor is right to propose concrete reform of a business rates tax which disproportionately burdens the small businesses and sole traders at the heart of local communities."
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