The (business) rent is too damn high!

An interesting comment from Neil Clifford, CEO of Kurt Geiger, the shoe retailer, comparing business rates in the UK to other countries:

"At our store in the Metro Centre in Newcastle we pay £160,000 a year in business rates on one 2,000sq ft shop. It basically makes the store completely unviable.
"How the hell can the council justify that? For a comparable store in the US and Germany, we would pay local taxes of just £10,000. When we sit down and explain this to our American owners, they say, 'What are you getting for this £160,000?' and we actually have no idea. "Business rates actually are what are killing UK retail, probably more than rents.
That last bit is fascinating. You'd expect a businessman to complain about the taxes on his business, it's as old a refrain as Time itself. However, Mr. Clifford is contrasting two different taxes, and pointing out that the local government-imposed business rates are extremely high in comparison to other countries, with no corresponding benefit. (You could expect UK rents to be high, since UK house and office prices are high and there's a proportional relationship between price and rent).

If business rates stay high and make retail branch profits negligible, the high-earning firms are going to expand elsewhere as Kurt Geiger are doing. So there does indeed seem to be some form of Laffer curve in business rates for successful international companies - and the UK is on the wrong side of it.

No comments:

Post a Comment

All comments are subject to retrospective moderation. I will only reject spam, gratuitous abuse, and wilful stupidity.