BRC warns about milking retail sector

- Last updated on GMT

With the UK Budget announcement planned for next week, the British
Retail Consortium has warned the Treasury not to increase the tax
burden on the retail industry - one of the few expanding sectors of
the British economy at the moment.

The British Retail Consortium has warned the UK Treasury that the upcoming Budget must avoid overtaxing the retail sector - one of the few drivers of economic growth in the UK economy.

The BRC said that increasing the tax burden on the retail trade could threaten jobs, innovation and investment.

Retailers fear a potential tax bill of £2.3 billion (€3.3bn) for the industry and the Treasury has been told that with the current trend of slowing retail sales and static prices, the sector could not withstand the constant onslaught of increasing taxation and government-based rises in the cost of doing business without serious consequences for retailers and the UK economy as a whole.

According to the BRC, the biggest concern expressed to the Treasury was the retail sector's concern that the proposed new regime of Stamp Duty (tax paid on property sales or purchases) would take £1.4 billion from the sector over the next three years.

Proposed reforms would not only push up the existing cost of Stamp Duty by raising the tax take, but also - by including new up-front payments - undermine the ability of new retailers to enter the market.

Bill Moyes, director general of the BRC​, said: "The Treasury must stop treating the retail sector as a piggy bank to be shaken just because the Chancellor got his sums wrong.

"In the current retail climate, the industry cannot go on absorbing increases in taxation and cost. The Chancellor needs to act to stimulate consumer demand, not suffocate the success of the one reliable engine of growth in the UK economy."

The UK retail sector is not the only one petitioning the Chancellor for leniency in the Budget, which will be announced on 9 April. Earlier this year, the Scotch Whisky Association issued​ its annual call for a reduction in spirits taxes (traditionally seen as something of a cash cow by Westminster), while the UK Wine & Spirit Association​ called on Gordon Brown to cut the duty on sparkling wine.

"Whilst the French pay only 4p per bottle, here in the UK we pay an enormous £1.65 per bottle. Initially introduced in Victorian times as a luxury levy to raise funds for the navy, this anomalous tax is outdated and must be brought in line with the duty rates on still wine which stands at £1.16 per bottle (compared with 2p per bottle in France),"​ the WSA said.

"English vineyards are producing some award-winning sparkling wines, which struggle to compete with often inferior products from abroad due to the huge costs associated with production. Eliminating the surcharge will lead to fair competition with other wines and ease the establishment of new brands."​ It will also reduce the level of cross-Channel shopping, the WSA said, as British sparkling will be much more competitive compared to its French counterpart.

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