Tesco and M&S warn Burnham against Budget tax raid on retailers
Top supermarkets including Tesco, Sainsbury’s and Marks & Spencer have urged Andy Burnham to rule out a Budget tax raid on retailers, warning they are already facing “unsustainable” costs.
The Retail Jobs Alliance (RJA), which represents retailers employing more than 1m people, has urged the Prime Minister not to prioritise pubs and bars over high street retailers.
Burnham has committed to easing the business rates burden facing pubs, bars and live music venues, as part of his pledge to rejuvenate British high streets.
But these commitments have sparked fears that the government could hike the business rates burden facing bigger retailers in order to balance the books.
The letter, seen by Morning Wire, warns Burnham against hiking the business rates multiplier for stores with a rateable value of more than £500,000.
The RJA wrote: “We welcome your commitment to ‘growth in every postcode’ and support the recent announcement to reduce business rates for pubs, clubs and live music venues, alongside measures to review reliefs for businesses that do not make a positive contribution to local communities.
“Retail stores are integral to high street renaissance but they cannot continue investing in communities if they face an ever-increasing tax burden.”
The retailers claim that footfall for hospitality businesses would “inevitably be reduced” if a hike to business rates eradicates retailers from the high street.
“The high street is a single ecosystem. Pubs, restaurants, retailers and other local businesses all rely on vibrant town centres with strong footfall and consumer spending. Reducing business rates for hospitality while increasing costs for retail risks weakening that ecosystem,” the RJA told the Prime Minister.
Business rates ‘driving up prices’
The trade body said retail is already the UK’s most-taxed sector compared to its economist output. The sector pays 21 per cent of all business rates though it represents only five per cent of GDP, it said.
The £7bn which was added to retail’s cost burden at last year’s Budget is a “direct cost driver on prices,” the retailers told the Prime Minister.
“Further increases would place even greater pressure on retailers’ ability to support customers through competitive pricing and cost of living initiatives, while continuing to offer employment opportunities in communities across the country,” the group added.
The RJA also represents Primark, Morrisons and B&Q-owner Kingfisher. Its letter was backed by Usdaw, the UK’s fifth-largest trade union.
The retailers called on Burnham to exempt all brick-and-mortar retailers from the highest business rates multiplier, which currently stands at 50.8p.
“This would support your commitment to growth in every postcode by safeguarding retail employment across the country, the foundation that makes vibrant high streets and communities possible,” they said.
Burnham has already faced calls to exempt high-street retailers from business rates rises. The Real Rates Reform Alliance has told the government to hike taxes on online sales to pay for a 37 per cent tax cut for brick-and-mortar shops.
Last month, a host of industry bodies accused Burnham of taking a “piecemeal” approach to business rates reform after announcing a review into the fairness of the system for pubs and hotels.
Days into his tenure as Prime Minister, Burnham announced a 20 per cent cut to the business rates bill of all pubs in the UK.