Saving the high street
In his Autumn Budget delivered 29 October 2018, Philip Hammond made a number of promises including measures to improve the lack-lustre retail sector in our High Streets.
There is no doubt that the major online retailers have caused a major shift in the way we shop. As faster broadband has become more commonplace, and the use of computers a regular feature at home, the drift away from viewing and buying goods on the shelf to viewing pictures and click and buy on the internet, will likely continue.
At present, online retailers have a competitive advantage over their High Street competitors. They don’t have to pay:
- business rates or rent for shop front property or
- salaries to sales staff.
And in the case of the mega online retailers, who can afford to exploit the use of tax havens to shelter their trading profits, they do not pay comparable tax on their trading profits.
The recent Budget offered a one-third reduction in business rates for retailers with smaller shop premises: those with a rateable value below £51,000. Although this reduction is for a limited period, two years from April 2019.
He has committed what seems to be a modest sum, £675m, to rejuvenating city centre areas. This will support the cost of:
- improving traffic flows to shopping areas,
- the renovation of empty retail premises to provide residential accommodation, and
- the repurposing of older or historical property.
City centre shops depend on foot-fall, if shoppers don’t pass by, then it’s unlikely they will become customers. In this respect, the above investment should encourage people to live and shop in city centre areas.
Mr Hammond also committed to start the process of increasing the UK tax take from online retailers, social media outlets and search engines, who sell goods and services to UK users. A new digital services tax will commence April 2020 and will levy a charge of 2% on the revenues generated by these concerns to customers in the UK.