Ruth Davidson: Maths Genius

H/t Lola, from The Herald:

Business leaders have warned the tax burden on high street shops is disproportionately high. Ms Davidson said: “The retail sector currently makes up 5 per cent of the UK economy but pays 25% of all business rates, over £7 billion per year.”

That’s about as helpful as saying “The haulage industry pays 90% of all diesel fuel duty” or “Smokers pay 100% of all tobacco duty”. Business Rates is a tax on valuable locations, and retail premises are usually in the most valuable locations (town centres). It’s as broad as long, if there were no Business Rates, rents and purchase prices would be correspondingly higher.

Having flunked the logic bit, she’s wrong on the facts as well. From the House of Commons retail briefing paper:

In 2017, consumers in the UK spent around £406 billion in retail purchases [about 20% of GDP]. In 2017, the retail sector as a whole contributed £194 billion to UK economic output (11% of the total), measured by Gross Value Added or GVA3; this was an increase from £190 billion in 2016.

In 2016, the sector employed 4.9 million people (20.5% of the UK total), and contained 374,000 businesses (15.5% of the UK total).

We can argue whether the retail sector is 11% or 20% of the UK economy or anything in between, but either way it’s more than 5%. I could have guessed that without looking it up.

Please note: £7 billion Business Rates divided by £406 billion sales = 1.7p for each £1 of sales on average or about one-tenth as much as the VAT thereon.