RETAILERS have backed proposals for business rates to be scrapped in favour of a revenue tax.

Former city council leader Jason Kitcat has contributed to a report which has made the controversial call to end business rates.

This comes amid a national debate on rates policy in the face of mounting concerns voiced by business and MPs in the run up to the Chancellor’s Spring Statement on March 8.

The Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) produced the report last week with advice from Brighton business consultancy Crunch.

Mr Kitcat, now micro-business ambassador for Crunch, endorsed the report’s recommendations and said in Brighton a change to a revenue tax would lighten the burden on small businesses which pay high rents and rates.

He said it highlighted a critical problem for high street retailers trying to compete with internet giants.

He said: “If you’re Amazon in a warehouse on a farm somewhere, you pay less tax than a boutique in The Lanes.”

The RSA report says the Government should consider whether business rates could be replaced with a levy based on real turnover.

Adam Chinnery, chairman of the Seafront Traders’ Association and owner of Brighton Watersports in the Kings Road Arches, said: “I think it’s a really good idea and I hope they bring it in soon.

“That would be a much fairer way to do it.

“Small businesses in the high street can’t compete with the large online shopping stores based in the middle of the countryside with very low rents and business rates.

“Rates are one of my largest overheads, so if they increase that I’ll seriously consider where I’ll be going in the future.”

Fal Blake, co-owner of Brighton couturier Gresham Blake, said of the report’s recommendation: “That sounds good. It seems unfair that companies like Amazon can operate from places where they have such small rates.”

Business rates – effectively the commercial equivalent of council tax – are set by central government and are indexed to the rental value of the business property.

The previous valuation was carried out in 2008 before the credit crunch and the results of the latest revaluation have now been communicated to businesses.

Brighton and Hove firms will receive their new rate bills at the end of the month.

In London and the South East, firms anticipate significant increases although elsewhere in the country costs should fall.

The issue has caused a great deal of controversy nationally.

WE GET NO SUPPORT FOR TRYING TO BE DIFFERENT

By Plamena Manolova

AS THEY anxiously await their new rate bills, retailers in The Lanes told The Argus the system was unfair and questioned whether they receive good value for money from their sizeable contribution to the council’s coffers.

Rental values have gone up in the city since the previous valuation in 2008, so business are anticipating a rate hike – and most are unhappy.

Kiriakos Baxevanis, who owns Little Jasmine Therapies and Spa, in New Road, is expecting a 25 per cent increase and said businesses should be given a break by either having their corporation tax or VAT reduced.

He said: “I think what this country needs right now is to help small and medium businesses, and increasing the business rates obviously doesn’t help.

“This is money that I could spend on hiring and training staff or investing in the business. I appreciate the services that Brighton and Hove Council provides but at the same time I have seen reductions there as well.

“On one side there is increase in the business rates and, on the other, there is reduction in council services and staff, so it makes me wonder where does the money go?”

Hilary Ormesher, owner of Appendage in Kensington Gardens, wanted more support from the council and has been too worried to use the online estimation tool to find out what her bill is likely to be.

She said: “I haven’t checked yet, I am scared to check. I have been here for 30 years and I don’t want anything awful to happen.

“It is hard always trying to absorb all those things because actually the amount of money you make doesn’t really go up to compensate those huge rises.”

She added: “I think Brighton makes a lot of money from this area because people really like to come here because it’s very different from other towns.

“We get no support for trying to be different and trying to be independent. They should think of us as being a valuable asset to the town, which I think we really are.”

Harry Ratcliff, who works at Marketplace Brighton in Meeting House Lane, said: “You don’t get value for your money. Shops in The Lanes pay for security around town now, we pay for our own rubbish to be collected and we pay for the Christmas lights to go up.

“It’s the shops that keep the town running and all we do is get charged for that and it does feel very unfair.”

Fal [CORR] Blake, who co-owns the Bond Street fashion store Gresham Blake with her husband, said: “My valuation is going up. My rents have increased in Brighton and in London, too, so we’ve been hit twice. It’s going to be a big rise, I think.”

She added that the Government should do more to insulate small businesses from increases.

She said: “In Brighton, the independent shops are so important to the city centre.

“That’s what people come for, and, with the other pressures small business are under like utility costs and the national living wage going up, what this means is that something has to give.

“So that will mean employing fewer staff, or making themselves less competitive – which is a shame – or they’ll close down and move on.

“I just think it’s a shame they didn’t look at rates a few years ago and fix them then because that’s the market we’ve had to trade through.”

Mrs Blake is not alone in considering it deeply unfair that a planned revaluation a few years ago was delayed, ostensibly to avoid interfering with the general election.

The previous valuation, in 2008, was taken at the top of the market, before the credit crunch hit and generated years of weak takings and meagre profits for small businesses.

During that period, rental values on the high street plummeted with business after business going bust and landlords having to offer competitive terms to avoid having empty units.

So a revaluation in that period would have reflected the tough climate but by now many high streets have rebounded, yet traders have never seen those lean years reflected in lower business rates.

A spokeswoman for Brighton and Hove City Council said it would support business whenever it could, and directed retailers to the council webpage brighton-hove.gov.uk/content/business-and-trade/business-rates/business-rates-relief-and-reductions which provides advice on reducing rates bills.

BILLS SET TO RISE IN SOUTH EAST

What are business rates?

They are the commercial equivalent of council tax. They are set by central government and collected and spent by local authorities. By 2020, all local business rates should be spent locally rather than the current more re-distributive model.

How are they calculated?

The rate bill will be 48.2 per cent of the rateable value of the property.

How is the rateable value calculated?

Every five years a nationwide valuation is done to attribute a rateable value to every commercial property. Experts take into account market fluctuations and leases agreed but the rateable value will not be exactly 48.2 per cent of the rent – it isn’t that precise.

What is changing?

From April, rate-payers in 1.9 million British properties will have to pay rates based on the 2015 valuation rather than the 2008 one.

What will that mean?

Most firms in London and the South East will see bills increase. In some recently-gentrified parts of the capital, rates may rocket 400 per cent. Elsewhere, where high street rents have fallen since 2008, rates will go down.

Can you appeal?

The Government is also reforming the appeal process. Firms will only be able to request a change to the rateable value of a property if the valuation was “outside the bounds of reasonable professional judgement”. Any appeal claim within a margin of error, expected to be 15 per cent, will be thrown out.