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Sainsbury's boss urges government to abandon business rates reform

CEO of Sainsbury's Mike Coupe Credit: PA

The head of Sainsbury's has waded into the argument over business rates, calling for "fundamental reforms" to a system which will cut the bills of businesses trading online, while costing high street retailers billions.

Mike Coupe attacked the current set-up, labelling it "archaic", and calling for a level playing field as pressure mounts on the government to review the controversial rates.

Mr Coupe told the Press Association: "The way it currently stands, there is an advantage for those without bricks and mortar operations, so there's a strong case for a level playing field in business rates and taxation more generally.

"Businesses like ours with lots of property and employees face a bigger burden than others."

Retail consultant Mary Portas has slammed the proposed reform as 'madness' Credit: PA

The government has overhauled business rates for the first time in seven years, and the hike, which comes into effect in April, highlights the discrepancy between physical businesses and those that are online.

Sainsbury's will be forced to pay up around £500 million, a rise from £483 million, while online giant Amazon will have its business rates bill cut at most of its warehouses, according to analysts.

The move has been called "madness" by retail consultant Mary Portas, who warned that costly rates will kill off a third of independent shops in Britain.

Business rates are tied to property valuations, so companies which own properties in the South East and in city centres will be disproportionately affected by the revaluation.

Businesses in London alone will be forced to cough up an additional £9 billion in rates over the next five years, while those in the North will see bills reduced or remain the same.

Critics fear new rates could lead to 'ghost towns'. Credit: PA

Mr Coupe said that investment could be slashed and high streets deserted if Theresa May decides to reevaluate business rates

He said: "As it stands, we could see high streets face serious challenges and ultimately more closures. It could impact investment in places that most need it, in areas of the country where there is already a marginal call on investment.

"Our challenge to the Government is for a fundamental reform of business rates, because we believe it is an archaic and outdated system. More than that, we'd like the Government to look at business taxation in general."

His comments come after business groups, including the British Retail Consortium and the CBI, signed a letter on Friday urging the government to abandon business rates reforms.

A Government spokesman said: "Nearly three quarters of businesses will see a fall, or no change, in their business rates as a result of the revaluation.

"Our business tax system is currently ranked as one of the most effective in the world."