Reform of tax system could help retailers survive, says Yorkshire businessman

THE UK's high street retailers could see their chances of survival improve if the UK adopted a purchase tax system similar to that imposed across the US, according to a leading Yorkshire businessman.
Andrew MearAndrew Mear
Andrew Mear

The entrepreneur Andrew Mear, whose company San Pedro has a £7 million portfolio of retail, residential and commercial properties across West Yorkshire, believes reform of the tax system could provide a boost for retailers who are struggling to cope with the pandemic and the growth of online shopping.

Mr Mear, who is also the chairman of Skipton BID (Business Improvement District), said: "There are still some fundamentals which need addressing if we are to make headway – not least a rates system which is no longer fit for purpose. The time has come for a more direct system of taxation to replace business rates.

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"For example, shoppers buying items in more fashionable or affluent areas would pay a purchase tax based on the value of that area – reflecting a tax system similar to the US.

"There could be a tax rate from two to 15% in the physical retail zone. Equally, this idea could be applied to online shopping, by looking at the buyer’s postcode and adding the applicable tax at checkout. Changing the system would bring back a more level playing field, giving the traditional retailer a fighting chance."

However, Mr Mear also predicted that retail zones will contract, with major retailers focusing on large shopping centres.

He added: "It comes as no surprise that cities such as Leeds, Manchester and York are enjoying a surge in popularity while peripheral areas experience a slow degeneration.

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Mr Mear said: "High Streets across Britain are in turmoil. Already struggling to survive, the coronavirus pandemic has proved another nail in the coffin of businesses where rents, rates and migration to online shopping were already said to be a key factor in the failure of retail businesses.

"The market town of Skipton is typically representative of the problems being experienced in High Streets across the UK, suffering a particular body blow with the closure of Rackhams a year ago – just months after the loss of the town’s Yorkshire Bank and branch of Santander.

"Since then we have lost the Dorothy Perkins and Burton’s Menswear store, Edinburgh Woollen Mill and several independent businesses.

Mr Mear added: "While the current pandemic has hastened the decline, Britain’s High Streets were already in need of a major rethink with some of its once mighty inhabitants – including the Arcadia group - having fallen on hard times.

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"It had become clear that once prime retail properties were no longer the cash cow they had been for landlords – although, as one myself, I would argue that rents did not cause the decline. Many businesses had also agreed to long leases with fixed rents and by so doing became the architects of their own downfall."

Before COVID-19, retail had largely failed to spot the change in consumer habits and the switch to online shopping, according to Mr Mear.

He added: "In the past six months that switch has dramatically increased, diverting an alarming level of business to online traders Add to that, an archaic rates system and the rapid transition to a working from home culture further impacting an already struggling office letting sector, and it leaves our town and city centres facing a bleak scenario.

He added: "So what can be done if the High Street is to survive?

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"There has already been much talk about making our towns and cities more experience-led, leisure-driven destinations, less reliant on shopping and more akin to the European ‘café culture’ way of life.

"That still holds true and we can also expect to see increasing amounts of office space – particularly in buildings of character – refurbished for residential living. As more and more people opt to work from home, it is likely many companies will re-evaluate their office space needs, creating even more ‘conversion opportunities’ in urban centres."

Another opportunity highlighted by the pandemic is a need for more holiday and short break letting properties, said Mr Mear.

He added; "With so much uncertainty surrounding foreign travel, UK destinations have enjoyed a boom in bookings with many people struggling to find available accommodation.

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"This is something we are already seeing in Skipton which is ideally located for anyone wishing to explore the Dales and surrounding areas by day and enjoy the town centre vibe by night –there is a clear demand for more holiday lets of the AirBnB kind which some property investors are already moving in on."

Mr Mear added:"COVID is proving a devastating blow for many businesses – and we are likely to see many more casualties over the coming few months.

"But it is also signposting opportunities – and certainly in Skipton, we remain confident that the town can eventually ‘tough it out’ to emerge as an exciting and reinvigorated place to be.

"High streets across the country can similarly re-emerge if they adapt to the new normal, embrace change – and accept things can never be as they once were."

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