Changes to the stamp duty laws in the UK have been bitterly criticised by retailers there, who have warned of job losses and the further decline of traditional high street retailing.
The UK government is planning a change to the regulations governing stamp duty as of 1 December, in particular the duty payable on business leases. Under the current system, stamp duty is charged once on the average annual rent at a rate of between 1 per cent and 24 per cent, depending on the length of the lease.
But the new system will oblige retail businesses to pay upfront a sum equivalent to 1 per cent of the total rent payable on the entire life of the lease.
Businesses such as pubs and restaurants, which take out long leases to help amortise the high cost of fitting out their buildings, will be among the hardest hit by the rule change - effectively negating the benefit of taking out the long lease in the first place.
According to the British Retail Consortium (BRC), the organisation which represents the retail industry in the UK, the changes will add an additional £200 million to the sectors stamp duty bill, an increase of 344 per cent.
"The impact of the proposals will be felt throughout the retail sector. Two out of three retailers will be subject to this tax and for many this means an eight-fold increase on their stamp duty bill," said Bill Moyes, director general of the BRC.
"Only a third of small businesses will be exempt [compared to government claims that 60 per cent will not have to pay the new rate]. Two thirds will see a doubling of their stamp duty levy. It is hard to see how new business can start up under these conditions. A survey of our members suggests that many small shops will be forced to consider closing."
The government said it had introduced the new law to stop retailers from avoiding stamp duty payments - hence the upfront payment at the start of the lease - but Moyes dismissed this as irrelevant.
"The claim that they are tackling avoidance is a red herring. This latest tax is a bid to refill the Treasury coffers by milking the only sector that has refused to be beaten by the burgeoning weight of tax and regulation. On top of ill thought out policies and legislation that have added to the cost of doing business, the Chancellor may finally have succeeded in achieving a stand still in retail growth," he said.
"With store expansion slowing, job creation halted and business costs rising the biggest loser will be the customer."
Moyes' claims appear to be supported by the Confederation of British Industry, which estimated that a retailer with a 25-year lease at an annual rent of £120,000 would currently pay £2,400 in stamp duty, compared to a massive £19,000 under the new scheme, an eight-fold increase.