Supermarkets warn tax hike may trigger surge in food prices
The largest supermarkets in the UK are urging the Chancellor to exclude them from a proposed business rates surtax. They warn that if implemented, shoppers will face increased food prices. Major retailers like Tesco, Sainsbury’s, Marks & Spencer, Waitrose, Morrisons, Asda, Aldi, and Lidl have all signed a letter advocating for tax relief to mitigate food inflation.
Call for Tax Relief from Supermarkets
The British Retail Consortium (BRC), which organized this initiative, asserts that these large stores could see a hike in business rates. This would occur if the government includes them in the new surtax on properties valued over £500,000. In contrast, smaller shops are anticipated to benefit from reduced rates as part of the government’s reforms.
Impact on Food Prices
The letter states, “If the industry faces higher taxes in the coming Budget, our ability to deliver value for our customers will become even more challenging.” This challenge will adversely affect households, leading to increased costs for consumers.
- Large retail premises represent only a small fraction of total stores.
- Despite this, they account for one-third of the total business rates bill in the retail sector.
- Any significant rise in rates could exacerbate food inflation.
Industry Concerns Over Tax Burden
The supermarkets are requesting that Ms. Reeves address the disproportionate tax burden faced by the retail sector. They believe that tax relief would signal government support for their industry and aid in curbing food price inflation.
Economic Context
Economic forecasts suggest that the Chancellor may need to increase taxes further, following a string of welfare cuts and subsequent adjustments. The BRC chief executive, Helen Dickinson, highlighted the immense financial strain on the industry, estimating that supermarkets face over £7 billion in additional costs in 2025.
These costs arise from factors like heightened national insurance contributions and new packaging taxes. The Treasury has been approached for comment regarding these developments.
