Andy Burnham’s plan to overhaul business rates to support small high street firms could cost around £880 million annually, according to fresh analysis.
The former Manchester mayor, now prime minister-in-waiting, intends to fund this through higher property taxes on large warehouses, specifically targeting online giants like Amazon.
Speaking on LBC earlier this week, Mr Burnham said there is “room for movement on tax” within Labour’s manifesto, whilst maintaining his commitment to the party’s fiscal rules.
His proposals, first outlined during the Makerfield by-election campaign, include a 50 per cent increase in the threshold for 100 per cent small business rates relief in England.
Forecasts by global tax firm Ryan suggest the policy could exempt more than 140,000 additional small premises from paying business rates altogether.
As a result, this is likely to reduce business rates liabilities by about £880 million, based on government tax data.
The expected proposal would increase the threshold for 100 per cent small business rates relief from a rateable value of £12,000 to £18,000 and extend the upper threshold at which firms receive tapered relief up to £21,000, from £15,000 currently.
Alex Probyn, a practice leader for property tax at Ryan, said: “Supporting small businesses is a great policy objective.
“The concern is how that is funded if things have to be revenue neutral.
“Larger commercial properties are already contributing more through the existing business rates surtax to fund lower liabilities for retail, hospitality and leisure.
“The obvious question is whether they are now going to be asked to contribute even more.”
In the run-up to the Makerfield by-election, which Mr Burnham won last month, he argued that “online giants” should contribute more through higher taxation of large warehouses to support smaller businesses and Britain’s high streets.
In an LBC interview after this keynote speech, he also indicated that there could be higher business rates on major developments on the outskirts of towns and cities to fund lower business rates for pubs and lift certain small businesses out of business rates altogether.
Business rates reforms introduced by the Government in April included a 2.8p business rates surtax on properties with rateable values above £500,000 in England.
However, many small businesses, particularly in the retail, hospitality and leisure sectors, are facing significant increases in tax payments over the next three years.