It Wants To Hike

WHAT, exactly, will the Labor party think it is doing? It wants to hike – yes, hike – company tax if it is elected in 2015, the latest of more information on utterly harmful guidelines unveiled in recent times. The idea is that this will “pay” for a freeze in business rates on small firms, meaning the web burden on business will stay unchanged. But this is a nonsensical idea on every level, not least because every sensible nation is reducing its tax rates on profits to woo globally mobile firms, and the UK’s efforts had begun to be noticed internationally.

All nutrients so far, low taxes on income attract businesses and wealthy people; high taxes on income drive them away. But you cannot drive land or landowners away and any taxes thereon (e.g. Business Rates) simply reduces the purchase price which a new entrant has to pay for the land (purchase price or lease).

He says “antiquated”, I say “tried and tested”. Business Rates are levied on all business premises – including out-of-town shopping centers. So that is clearly a level playing field. And more often than not, traditional shops are actually owned by smaller landlords or might be owner-occupied. Out-of-town shopping centers are possessed by huge multinationals.

So these multinationals are using the “small impartial dealer” as a convenient human being-shield (see also “Poor Widows In Mansions”). Further, all tenants care about is the total expenses of rates plus lease, they don’t caution how it is split. So instead of arguing that rates are too high, you could equally argue that rents are too much and there’s a free of charge-market solution to that.

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NB, it’s all about airport parking (and bus routes etc.), actually. That’s what “the high street” needs most. Online retailers efficiently use land more, they can manage with lower value sites for his or her warehouses, so they pay less in rent and less in Business Rates. That’s their choice, isn’t it? If they couldn’t secure an enormous advantage by owning perfect sites with big car parks, they simply wouldn’t pay the Business Rates.

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