Stuart Adam, Institute for Fiscal Studies - Business rates: reform, reduce or

Business rates: reform, reduce or replace? Stuart Adam, Institute for Fiscal Studies ▪ 20 June 2022 Business rates: ▪ LSE Taxation Seminar ▪ London reform, reduce or @TheIFS replace? Business rates in England, 2022-23 60% 50% 40% 30% 20% 10% 0% Estimated 2015 market rental value Business rates: reform, reduce or replace? © Institute for Fiscal Studies Tax as % of rental value £0 £10,000 £20,000 £3. [...] Countries shown where data available; average is among those. [...] Business rates: reform, reduce or replace? © Institute for Fiscal Studies …but declining in importance Business rates as % of total government revenue 6% 5% 4% 3% 2% 1% 0% Source: IFS Taxlab Business rates: reform, reduce or replace? © Institute for Fiscal Studies Recent developments ▪ Succession of ad hoc (temporary or permanent) reliefs over past decade ▪ And repeated delays to revaluations ▪ Bi. [...] However, the short-run impact of changes to business rates affects tenants more than landlords’ ▪ Cambridge Econometrics (2008): ‘The main conclusion is that 100% of the benefits from [business rates] relief are passed into rents and therefore accrue to landlords, although the range of uncertainty surrounding this statistical estimate puts the boundary at somewhere between 65% and 150%.’ Business.