Retailers' tax burden has 'rocketed 80%' since 2005

UK high-street chains are grappling with an unfairly high tax burden, a new report says.

by Emma Haslett
Last Updated: 13 Jun 2013

It’s pretty awful being a retailer at the moment: not only has online shopping caused decidedly lighter footfall on the high street, but bad weather is contributing to a general malaise among those who are left. Now, a report by PricewaterhouseCoopers has found that the amount of tax the UK’s biggest retailers pay has increased by 65% over the past seven years, hitting £8.3bn. Ouch.

Retailers are among the hardest-hit by tax rises, the report says. It measured tax take from the Hundred Group of companies, which includes, among others, large swathes of the FTSE 100, and found that retailers pay on average 59% tax, compared with 39% across other companies.

The problem is not, it adds, corporation tax - but who pays that these days, anyway?. The take from that has only gone up by 11% since 2005. The problem is other business taxes, which have risen by almost 80%. Indeed, for every £1 of corporation tax, retailers pay about £2.40 in other taxes – including £1.44 in business rates and 64p in employers’ national insurance contributions.  

The report comes a few weeks after J Sainsbury chief Justin King called on the government to create a ‘level playing field’ between online retailers, many of which are based outside the UK, and high street chains.

He said cuts in corporation tax – the government has pledged to reduce it to 20% by 2015 – had benefitted international online retailers, but had not done much to help UK-based chains, because they have rocketing business rates and national insurance costs to grapple with. In fact, he said that for every £1 the supermarket saved on corporation tax, it had paid more than £2 in business rates and national insurance.

It’s a tough question for the government, which has a soaring deficit to plug. But Christine Cross, PwC’s chief retail adviser, reckons retailers should be a priority.

‘Retail in the UK not only gives domestic employment, but also stimulates consumer confidence and makes a significant contribution to the public purse. However, high business rates represent a significant burden for those still trying to balance physical stores with retail,’ she says.

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