Planned business rates increases could 'destroy an extra 19,300 jobs and kill off an additional 582 retail businesses, according to an analysis by the British Retail Consortium (BRC) on the economic impact of business rates increases.

The independent analysis, conducted by the Centre for Economics and Business Research, examined the knock-on effects of the 30% business rates increase on jobs, business failures, public finances, investment and profits.

It estimates those increases will be responsible for:

  • 19,300 retail job losses by 2012 - in addition to those resulting from other causes
  • 582 retail business failures by 2011 - in addition to those resulting from other causes
  • £50m extra on the government’s unemployment benefits bill in 2011 alone
  • A reduction of almost £500m in take from other taxes in 2011 alone
  • £800m a year less investment by retail businesses by 2013

The BRC said it has previously calculated that annual increases, next April’s business rates revaluation, last year’s loss of empty property relief and business rates supplements could add £1.6 bn to the £5.45bn retailers paid in business rates in 2007/2008. This would push the retail sector’s total rates bill up to £7 bn by 2010/11.

It said: 'The need for lots of shop premises in high streets, shopping centres and retail parks, makes retail more property-dependent than other business sectors and so more sensitive to property cost increases.

'Retailers already pay 25% of business rates despite generating only eight per cent of Gross Domestic Product.'

The BRC said it welcomed chancellor Darling's decision to give retailers the option of postponing part of this April’s five per cent annual increase in business rates but pointed out the bills have still to be met in full over the next two years.

It has called on Darling to use his Budget to announce an immediate freeze on all new business rate burdens and the reinstatement of business rates relief for empty commercial property.

Stephen Robertson, British Retail Consortium director general, said: 'Our report reveals the scale of the potential damage to jobs, businesses and the wider economy from these business rates increases.

'The irony is a third of what the Chancellor gains in extra business rates will be lost to him as a reduced retail sector delivers lower amounts of other taxes and the benefits bill rises. Alistair Darling must use his budget to announce an immediate freeze on all new business rate burdens and the reinstatement of empty property rates relief.'

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