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Retail body proposes energy tax to replace business rates

Replacing the current business tax, based on property value, with taxes based on other measures including energy usage is one of four ideas proposed in a paper published by the BRC today.

The new tax could be based on the amount of energy consumed in kWh, the paper suggests, and could be delivered by allowing the removal of tax in the Climate Change Levy. Existing exemptions and reliefs would be carried over from the old system.

Helen Dickinson, director general of the BRC, said: ‘We have a once-in-a-generation chance to fundamentally change the business rates system and the time is right to think creatively and in the best long term economic interests of the UK.’

The BRC has complained that the current model in a disincentive for companies to invest in property. A tax based on energy efficiency would remove that disincentive and allow companies to directly influence their business rates in the future, the BRC’s paper states.

Commenting on the suggested options for reform, Dickinson said: ‘These potential options would be good for the public, the economy and businesses small and large, while still providing significant tax revenues for the government. We now intend to analyse each one in more detail and very much hope that we will stimulate discussion that goes beyond tinkering with the existing system.’

Bill Wright, head of energy solutions at the Electrical Contractors’ Association, said: ‘We welcome the radical proposals from the BRC. Other initiatives such as the Green Deal have only had limited results when it comes to behavioural change, but this is a proposal that might actually change the way businesses behave. However, it’s unlikely to happen due to the potential loss of tax revenue.’