Tory leadership hopefuls propose major tax reforms for small businesses

Two MPs have declared their support for small business owners in their campaigns to secure the Conservative leadership

 

As Theresa May prepares to step down as Prime Minister, two MPs have come out in support of small businesses in their bids to succeed her as the Conservative leader.

 

Health Secretary Matt Hancock is pledging to save the high street by scrapping business rates. The £1.5 billion-a-year pledge would exempt hundreds of thousands of businesses from the hated tax. He would also introduce an Amazon Tax for social media platforms, internet marketplaces and search engines. The tax was first mentioned in last year’s Budget.

 

“I would end business rates for small businesses on high streets altogether, and I would pay for it by an increase in the new digital services tax,” Hancock told the Daily Telegraph.

 

He added that he would access cash from the £26 million Brexit buffer set aside by Philip Hammond as well.

 

Hancock’s business rates proposal is part of a wider economic policy including a rise in the National Living Wage to £10.21 by 2022.

 

Rival candidate, Sam Gyimah, has also said that he will reform business rates, replacing it with a commercial land tax. It’ll be one of five tax reforms to stimulate economic growth. In addition, he would make the tax break for investment in business infrastructure unlimited.

 

Gyimah told City AM: “For the Conservatives to win over the voters lost to other parties, it is essential that we rediscover our core values of work, enterprise and aspiration.”

 

High streets suffer worst May on record

 

These proposals come amid news that the high street has endured its worst May ever. In-store sales declined 3.3pc year-on-year last month from a negative base of minus 2.2pc in May last year, says accountancy firm, BDO.

 

Lifestyle and fashion sales fell, marking the fourth month of negative results since the start of 2019.

 

“Our high streets are creaking at the seams. It’s time the government took action and showed some much-needed support for retailers and to the millions of people that the sector employs,” said Sophie Michael, head of retail at BDO.

 

A separate Office of National Statistics study reveals that just under a third of high street addresses are being used for retail as jobs in the sector declined in every region but London between 2012 and 2017. Across the UK, more than half of high street addresses are now residential and the number of commercial properties has dropped to 31pc from 33pc.