Bookshops could be wiped off the high street as a result of changes to the business rates system, the industry has warned the Treasury.
In a letter to David Gauke, chief secretary to the Treasury, the Booksellers Association said many bookshops will be crippled by rate increases and described the tax as “archaic”.
It also criticises the lack of tax paid by multinational online retailers such as Amazon and called on the Treasury to give bookshops the special status of “community asset value” – reflecting the benefits they bring to the local area – which would allow them to qualify for a 20% discount on their business rates.
The letter cranks up the pressure on the government to take action on business rates in the budget next month. Business rates payments are changing because of a new revaluation of Britain’s property – the first in seven years – which takes effect from April.
Tim Godfray, chief executive of the Booksellers Association, said: “Our concern is that many booksellers who will have to continue to pay business rates from April this year are going to be absolutely crippled by massive increases, especially those in London.”
Daunt Books, which has seven of its nine shops based in London, will see its business rates bill double from April while the letter also points out that the Waterstones in Bedford pays 16 times more in business rates per square foot than the nearby Amazon distribution centre.
Brett Wolstencroft, manager of the Daunt branch in Marylebone, central London, said: “In the past five years we have faced unprecedented rent increases and now an unprecedented increase in business rates. There needs to be a radical readjustment if you want to try and maintain a varied high street that a community can be built around.”
James Daunt, the founder of Daunt books and now the managing director of Waterstones, said the business rates tax was “completely outdated”. The bill for Waterstones will increase from April by £2m, equivalent to a fifth of last year’s £9.8m profit.
Daunt said nationwide chains such as Waterstones have the financial firepower to weather a rise in business rates while benefitting from reductions at some shops in some parts of the country, such as the north of England.
However, Daunt warned: “If you are a vulnerable independent, and most are, then rates will be the nail in the coffin.
“Bookshops are under an extreme and unique pressure from the internet. Amazon is a ferocious competitor and this hands them another advantage. Their rates will go down, ours will go up. Why impose a tax on consumers’ behaviour on the high street and not online? I don’t understand that. The online guys are aggressive on tax anyway.
“What this will mean is that the high street becomes even less diverse. High streets will be full of estate agents and coffee shops. Rates are making the high street a much less healthy environment to operate.”
The Booksellers Association said bookshops should qualify as community assets because they were social hubs and support literacy.
Godfray says in the letter to the Treasury: “We strongly feel that bookshops bring to their locality very many advantages that should be recognised in the tax system.
“They are educational, calm, safe locations, and very often act as a magnet, bringing increased footfall to their surrounding areas, to the benefit of other retailers.
“In view of the ongoing problems the UK continues to suffer with from literacy, I would suggest that bookshops are fundamental to the government’s programme of encouraging reading and aiding literacy.”
