Leading retailers caution Chancellor against £400m business tax hike
Warning: Chancellor Jeremy Hunt
Jeremy Hunt has received a plea from major retailers to avoid a £400m increase in business rates, which they argue could undermine the fight against inflation.
Executives from Marks & Spencer, Greggs, Harvey Nichols, Tesco, Sainsbury’s, and B&Q are among the 44 signatories of a letter calling for business rates to be frozen.
Coordinated by the British Retail Consortium (BRC), the letter states that companies have been struggling to mitigate price rises despite significant cost increases in the past 18 months, which have impacted profit margins.
The letter acknowledges the industry’s successful efforts in reducing shop price inflation from a peak of 9% in May to 6.9% in August, stating, “An inflationary increase to business rates would add over £400m to the industry’s cost base next year, severely undermining this progress. It would also have a much wider impact, threatening the viability of many shops and hindering the industry’s capacity to invest.”
Normally, business rates increase in April based on the previous September’s inflation rate. However, due to the pandemic, rates have been frozen for the past three years.
According to the BRC letter, if inflation remains above 6% this month, an increase in business rates next spring would result in over £400m in additional costs for retailers.
A survey of BRC members revealed that 59% of respondents believe such a hike would exert “significant” upward pressure on prices for customers.
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