John Lewis Partnership Chairman Jason Tarry has warned that proposed changes to business rates could result in further high street closures, with increased costs for larger retailers potentially having a knock-on effect on independent businesses.
Mr Tarry has criticised plans for a so-called ‘warehouse tax’, arguing that higher property taxes on larger retail premises could disproportionately affect department stores and supermarkets rather than online-only retailers.
Writing in The Telegraph, he described the proposals as demonstrating a “fundamental misunderstanding of how modern high streets work”.
He argued that larger retailers play an important role in supporting town centres, attracting shoppers who also visit surrounding independent businesses.
Mr Tarry warned that increasing the financial burden on these stores could ultimately lead to closures, reducing footfall and putting additional pressure on smaller retailers that rely on busy high streets.
His comments come ahead of the Chancellor’s Autumn Budget on 28 October, with the retail industry continuing to call for reform of the business rates system.
According to Mr Tarry, the John Lewis Partnership currently pays approximately £170 million annually in business rates, making it the company’s largest tax expense and its second-biggest operating cost after wages.
He revealed that recent changes to the system have left more than 200 John Lewis and Waitrose stores facing higher charges, compared with just 18 of the Partnership’s distribution centres.
Despite the measures being intended to address the tax imbalance between online and bricks-and-mortar retailers, around 80 per cent of the additional burden has fallen on its physical stores.
While acknowledging that online-only businesses should pay their fair share, Mr Tarry argued that further increases in property taxes could make operating physical stores less financially viable.
He has called on the Government to ensure that no high street shop faces higher taxes as a result of future changes to the business rates system.
The warning comes as John Lewis continues to invest in its retail estate, with £50 million being spent on its department stores this year. The Partnership also plans to open three new Waitrose branches and refurbish a further 28.
Mr Tarry stressed that retailers need a more predictable tax environment to continue investing in their stores, employees and local communities.
However, according to reports from Sky News, the Treasury is understood to have ruled out further tax increases on warehouses in the upcoming Budget.
His intervention follows similar concerns raised by Marks & Spencer Chief Executive Stuart Machin, who has also called for changes to business rates, arguing that physical retailers already shoulder a disproportionate share of the tax burden.
The issue remains particularly relevant to independent electrical retailers, which continue to face competition from online-only operators alongside rising costs associated with maintaining physical showrooms and high street premises.
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