As usual there was plenty of bluster coming from the dispatch box at today’s Autumn Statement and it looks like it will be well into the next parliament before we truly know if this was a radical step on the road to a more pro-business and particularly pro-retail future.
The government has at last bowed to calls for a “fundamental reform” of business rates, albeit not until at least 2016, which is at least going in the right direction but there will be little shouting from the rooftops from retailers as yet.
Word on the street this morning was that the chancellor had been won round to the argument that business rates were“not a level playing field” and that non-bricks and mortar firms should be paying more.
This was the central focus of a campaign led by the likes of the BRC and supermarket bosses including Justin king, until last year, when they had a dramatic change of tack.
Realising that online companies are just as much part of the retail community, and in some cases are literally the same company, the BRC has since rowed back from that argument considerably and was today arguing for a much more rational debate on a fair and equitable system for all types of businesses.
So there would have been alarm bells raised by the chancellor’s rhetoric as well as relief that the government is no longer just tinkering around the edges. Likewise with reports emerging this morning that the government might be planning to dream up some kind of new “sales tax.”
That will bring back memories for the BRC which 10 years ago fought successfully against plans for a new localised sales tax to replace national rates, on the grounds that it would “distort markets, increase tax liability and vastly increase compliance costs.”
Yet if rates are to be replaced, rather than tinkered with, the chancellor somehow has to come up with a system which will replace the £25bn earned from a flawed, yet tried and trusted source of revenue, of which retailers currently pay getting on for a third.
Organisations including the BRC have already tried to think of replacements don’t forget, with the idea of a green tax even mooted last year (and quickly dismissed), among others, but the focus was on how retailers could be incentivised by a system in which they would somehow pay less, rather than more, based on their contribution to the economy. A sales tax suggests the opposite.
Nobody has yet come up with an alternative that would appeal to all sides of the industry as well as the Treasury. This is why, with so little detail and so much political point scoring today, it is sadly far too soon to read too much into the announcements.
The same is true of Osborne’s so called “Google tax”. The chancellor says it is a move to make sure multinationals “pay their fair share.”
Like online companies these have been the source of much angst among some UK businesses. Yet what was the immediate result of this announcement shares in UK-listed fmcg giants, including SABMiller, Unilever, Reckitt Benckiser and Diageo, went into reverse gear.
That’s probably not the sort of pro-business signals Osborne wanted to send out, bluster or not.