British retailers in plea for permanent business rates cut

LONDON (Reuters) - Some of Britain's biggest retailers including Tesco and bookstore Waterstones have urged the government to permanently cut business rates if it wants physical stores to survive in the age of mass online shopping.

Britain's retail sector has for years complained that the business rates system, charged on most commercial properties, is archaic and hands an unfair cost advantage to online retailers such as Amazon.

With the pandemic driving the growth of online sales even further, the retailers, which also include Kingfisher and supermarkets Asda and Morrisons, said business rates could hamper any recovery and destroy thousands of jobs.

In recent months several major clothing retailers have collapsed, with their brands then bought by online-only groups which do not need to hire the thousands of staff that once ran the shops.

The rates, which help fund local services, were halted at the start of the pandemic but are due to restart in April.

"Reducing business rates for retailers and rebalancing the tax system to ensure online retailers pay a fair share of tax would be revenue-neutral, provide a vital boost to bricks and mortar retailers and support communities in need of levelling up," the CEOs of 18 retail and property groups said in a letter to finance minister Rishi Sunak, published on Monday ahead of his March 3 budget statement.

Supermarkets initially benefited from the freeze on business rates but paid it back after performing strongly during the pandemic.

Prior to the pandemic, business rates' share of total tax receipts was about 4%, according to government data. Last March, Sunak promised a "fundamental review".

While the letter does not explicitly call for the introduction of an online sales levy, Tesco, Britain's biggest retailer, has previously called for one.

"We want to see thriving high streets, which is why we’ve spent tens of billions of pounds supporting shops throughout the pandemic," the finance ministry said in a statement.

"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."

(Reporting by James Davey; additional reporting by William Schomberg; editing by Michael Holden and Louise Heavens)