Call for tax changes to help retailers

21 August 2008

The government has been urged to introduce a number of changes to the tax regime in order to help retailers cope with the economic downturn.

In a letter to the Chancellor, who is to begin drafting his pre-Budget report, the British Retail Consortium (BRC) set out its plans for government action to reduce business costs and boost consumer spending.

Among its proposals, the BRC called for measures that include ruling out any extension of local tax raising powers, such as Business Rate Supplements (BRS), until the full consequences of these revenue raising measures are properly understood; re-introducing empty property relief; and reviewing the tax treatment of unfair lease conditions where retail tenants have to pay large exit fees when surrendering leases early but do not qualify for tax relief on these payments.

The BRC added that it wants to see the introduction of zero VAT ratings for environmentally friendly and energy saving goods, such as low energy light bulbs, as a way of encouraging consumer spending.

Also on the BRC’s agenda is a commitment for the minimum wage never to exceed average earning increases and for the Low Pay Commission (LPC) to take into account difficult trading conditions, such as the current environment, and their impact on the sector.

Stephen Robertson, the BRC’s director general, said: “Retailers are being hit by a double-whammy of a deepening economic slowdown and a range of higher property costs. The Government should alleviate the increase in retail property costs by bringing back empty property rate relief and allowing retailers tax relief on the large exit fees they pay when surrendering leases early.”

Mr Robertson added: “We fully support the Government’s targets on energy efficiency and its determination to reduce VAT on energy efficient products, but to truly make a big environmental impact and influence consumer change, VAT needs to be scrapped on green-friendly and energy-saving goods.”

On wages, Mr Robertson said: “Retail is responsible for over 10 per cent of UK employment, leads the way on training and workforce diversity and is at the heart of the Government’s drive to help difficult-to-employ people back into work. Retailers support the National Minimum Wage but future rises should not exceed average earnings increases.”