| Rachel Reeves is drawing up plans to increase business rates paid by online giants like Amazon, we reveal today, as she seeks to bolster the high street in next week's budget. She wants to force online companies to pay more while reducing bills on brick-and-mortar shops, leisure and hospitality, our sources tell us. Many in the sector say the overhaul is long overdue — and has long been hinted at by the Chancellor herself. Business rates are currently based on the value of property, meaning the out-of-town warehouses and distribution centers of online retailers are taxed less than high street shops. Reeves previously described the system as "not fit for purpose" and "unfair." She is likely to announce her plans in the budget, before putting them out to consultation ahead of bigger reforms next year. Reeves has made political hay out of attacking Amazon before, in the name of defending other business interests. "High street businesses pay over a third of business rates, despite making up only 15% of the overall economy," she said in her speech to Labour conference in 2021. "But when Amazon's revenues went up by almost £2 billion last year, how much did their tax go up? Less than 1%. If you can afford to fly to space, you can pay your taxes here on Earth."  Keir Starmer and Rachel Reeves at Labour conference last month. Photographer: Hollie Adams/Bloomberg Judging by the response on X to the story, this is an unusually popular move — rare for reporting about this tricky budget. But there is yet another reminder today of the trouble ahead for Reeves. One in four councils in England is likely to need emergency funding to avoid bankruptcy in the next two years, the Local Government Association has warned, publicly asking the Chancellor to give them enough money to avoid that situation in next week's budget. That seems highly unlikely. Angela Rayner and Reeves were engaged in a stand-off over funding for Rayner's ministry last Friday, and while Rayner may have secured wins on housing, local government looks particularly squeezed. We outlined in this piece Reeves' thinking going into the budget: short-term spending restraint which she says is unavoidable, followed by longer-term investment. The challenge for Reeves is that spending on councils could well become unavoidable in the short-term, even if it isn't allocated in the budget. If — or when — a council goes bankrupt, the Treasury will have to pay to sort it out, just in a more chaotic way and less predictable way. Want this in your inbox each weekday? You can sign up here. | 
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