FSB adds fuel to the fire over tax hikes

The snow might have affected small businesses, but it could be the fuel duty hike that stings the most...

by Elizabeth Anderson
Last Updated: 09 Oct 2013
The UK’s SMEs have had a tough time of late. Even the biggest retailers suffered at the hands of the bad weather that battered Britain over the Christmas period, but it was small businesses who really felt the chill. A quarter had to shut up shop entirely during the heavy snowfall, according to the Federation of Small Businesses - costing them up to £5,000. Unfortunately, now higher fuel duty has kicked in, their woes are far from over...

Of those businesses forced to shut, almost 40% closed for up to five days - while 7% were out of business for even longer.  Businesses blamed transport disruption, staff absences and problems accessing their premises for the enforced shut-downs; as Paul Aitken of online pawnbroker Borro.com mentioned in an interview with MT last week, he’s seen an increase in small retailers on his books since the snow started.

And although such weather-related chaos will hopefully be a one-off, the New Year might not have brought much festive cheer for small business owners. For a start, there's the rise in VAT to 20%; more than 70% of small firms expect this to have a negative impact on purchases.

But the biggest threat, according to the FSB's survey, may be the rise in fuel duty. On January 1st, fuel duty rose by 0.76p a litre – and the VAT increase to 20% three days later didn't help either. Nearly 40% of owners reckon this will have the most damaging impact on their business in the coming year.   

The FSB wants the Government to put in place a fuel duty stabiliser to stop prices rising so high. This would mean lower fuel duty when oil prices rise, albeit with higher duty when prices fall. ‘While the Government cannot control the weather, it can reduce the impact record fuel duty rates has on everyone, not just small businesses,’ said John Walker, the FSB's national chairman.

But will it make much difference? Fuel prices have been increasing steadily over the last year (there's even been a big spike in the last week, thanks partly to the leak in BP's North Alaskan pipeline); unleaded petrol has risen by about 20p per litre since 2009. Throw in the VAT hike, inflation in raw material costs and the impact of the cold snap, and it's no wonder that some small firms are feeling distinctly nervous about the year ahead. And it’s not like there’s much point in UK firms fitting solar panels on the roof…

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