They say the current system puts retailers with large estates at a disadvantage to online firms.
The chief executives of 18 companies and groups have written to the chancellor warning that a return to the old system “will hamper the recovery of the retail sector post-pandemic, potentially putting thousands of jobs at risk”.
Business rates are calculated by looking at a property’s rateable value and multiplying it by a tax rate set by the government. A new tax rate comes into effect at the start of each financial year on 1 April.
For instance, Arcadia – which owned Topshop, Burton and Dorothy Perkins at the time – would have had to pay £91m in business rates on its 444 stores in 2020, had there not been a tax holiday, Altus Group says.
Robert Hayton, UK president of property tax at Altus Group, told the BBC that changing the business rate system would be “a good place to start” in trying to correct the imbalance between online and bricks-and-mortar retailers.
However, he added that business rates had often been reviewed in the past 20 years and nothing had changed, because the need to keep the changes fiscally neutral meant that one sector could benefit only at the expense of another.
“If some additional money can be created through something like an online sales tax, and then crucially, if that can be ring-fenced and made available to make some improvements to business rates, then I think that’s a really positive outlook,” he said.
“Last year, we created 10,000 new jobs and last week we announced 1,000 new apprenticeships. This continued investment helped contribute to a total tax contribution of £1.1bn during 2019 – £293m in direct taxes and £854m in indirect taxes.”
A Treasury spokesperson said: “We want to see thriving High Streets, which is why we’ve spent tens of billions of pounds supporting shops throughout the pandemic and are supporting town centres through the changes online shopping brings.
“Our business rates review call for evidence included questions on whether we should shift the balance between online and physical shops by introducing an online sales tax. We’re considering responses now and will update in due course.