The Treasury Select Committee has demanded urgent action to reduce the business rates liability of high-street shops.

A report by the group of MPs said the current system “damages the competitiveness of shops” because online and out of town shops fail to pay their fair share of business rates, putting an unfair burden on normal retail outfits such as convenience stores.

It also called on the government to “urgently investigate” how to make business rates re-evaluations more frequent before the planned 2025 change to a three-year evaluation cycle.

Rates specialists Altus group uncovered that the 2017 revaluation will save Amazon and Tesco over £100m, while on average small shops will pay an extra £3,663. Altus’s president of business rates Alex Probyn called for higher taxes for online retailers in order to provide extra relief for small retailers.

Waterstones CEO James Daunt said: “It is driving out the independents that give the high street its personality.”

Under the current system independent convenience stores have been penalised for their locations and store features and services such as ATMs and CCTV. ACS CEO James Lowman said the scheme discourages investment.

Joe Williams, owner of The Village Shop in Hook Norton agreed. He told Retail Express: “I’m now having to decide whether to lop off 100 sq ft from my shop floor in order to fall under the £12,500 rateable value for rural rates relief and save £6,000. Government’s should be encouraging growth, this is the opposite.”