Friday, 15 February 2013

Coming to a high street soon?

With news in from the Independent that less than 10% of the £1.2million set aside by government for the Portas project to bring some of Britain's high streets back to life and the never ending revelations about tax dodging by big businesses across the board I've come up with a way to do what Portas wants (stop the deracination of our town centres) and the rest of us want (for all taxpayers, whether corporate of personal to pay their fair share of tax) ... it's relatively simple ... a business rate surcharge directly linked to the proportion of on-line sales for retailers and service providers.

It would work in a similar way to the highly discriminatory method currently used to determine the way pubs are rated by Fair Maintainable Trade and notional market rents (determined by the pubcos etc in cahoots with the Valuation Office) ... and its called The Community Retailing Quotient (CRQ).

CRQ is a surcharge on business rates valuations linked to the proportion of turnover a retailer derives from online sales emanating from their premises. The CRQ system would give relief from the surcharge to the same value as each local authority's median business rates valuation, at which point the surcharge as a percentage of trade which is attributed to online sales for any transaction originating in the UK for the business operator is levied on top of their standard business rates valuation. (By the way this would also work for all the utility companies etc who avoid their tax obligations and have spent a decade or more persuading us all to go online to order and pay for their services.)

As there are regional variations in the density of premises used by online retailers etc, funds collected from the CRQ would be remitted by local authorities to central government to offset the budget cut requirements of the Treasury enforced on local authorities. Broadly cost neutral for the exchequer, less minimal administration costs, plus savings for HMRC from not having to pursue global companies for their fair share of other taxes, such as VAT and corporation tax.

Of course, there are businesses that already contribute to their local economies by having high street premises and also retail online; those specific premises would be exempt from the CRQ surcharge as they are already "fair retailers".

Use of business premises by online retailers as local collection points for customer orders located in town/city centre retail areas could be offered an introductory business rates holiday, say, the first six months, equivalent to each local authority's median business rates valuation and exemption from the CRQ for those premises. Online retailers locating to city/town retail areas would have sufficient operating costs saving to promote their new community based business, say, from reduced distribution centre to household courier fees, this transportation cost being transferred to the consumer.

Having a "utilities hub" in each town centre where consumers could interact with real people when they need advice about tariffs, energy efficiency etc could be another way for some big businesses to mitigate its CRQ liability. Surely some of us can remember Gas Board, Water Board, Electricity Board, and BT shops where one could make payment, get advice etc? We could even have banks with real bank managers, not customer service representatives ... wouldn't that be novel!

By returning footfall to high streets online retailers/service providers can continue to trade online and pay a fair share of taxation and encourage customers to join them in their collection outlets ... needless to say these outlets, if presented as glorified Argos stores, wouldn't be popular with significant numbers of consumers ... so collection outlets could incorporate cafes, bars and casual dining operations, no doubt equipped with free wi-fi or hard-wired sales terminals to order whilst in-store. Can you imagine the achingly hip and cool new incarnations of shops if Google and Ebay offices are anything to go by?

(Not to interrupt the flow of your reading but this just published in Marketing Week about Google's plans for retail outlets 19/2/13)

Local communities benefit from the renaissance of our high streets, essential local services could be protected; jobs could be created where they are needed, in local communities, (albeit at the cost of more "cloning") and online retailers/service providers gain an additional income stream and renewed customer confidence and trust in their brands.

Of course, this will never happen, as while it would be broadly cost neutral for the Treasury, it would cost big business billions in increased tax and other costs ... and their owners/shareholders, bankers, accountants, lobbyists and our political "representatives" will never stand for that. Even if they did acquiesce there would still be a bar to this being adopted ... us.

We just love not having to stir our stumps and prefer all the things we consume to be delivered to our doors, be they real world or digital.

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