Retail and hospitality groups urge Chancellor to cut tax burden

John Healey has been called upon to reduce the significant tax burden currently facing the retail and hospitality sectors, which industry leaders describe as disproportionately high compared to other parts of the economy. New analysis conducted by the British Retail Consortium and UK Hospitality indicates that these two industries face a heavier fiscal load than any other sector in the United Kingdom. The findings suggest that the current tax regime is placing unsustainable pressure on high street businesses, prompting a coordinated campaign to influence the upcoming fiscal policy decisions.

According to the joint report, hospitality businesses pay 82p in taxes for every pound of revenue, while retail firms pay 72p. This stands in stark contrast to the banking sector, which pays only 40p per pound. Allen Simpson, the chief executive of UK Hospitality, stated that these figures highlight a shocking disparity that the Chancellor must address at next month’s Budget. He argued that the level of taxation on hospitality is truly shocking when compared to the rest of the economy. Simpson emphasised that nothing demonstrates the unfairness of this burden more than local pubs, neighbourhood restaurants and coastal hotels bearing a tax rate that is double that of a bank. He urged that the Budget should serve as a moment of change where the tax burden on hospitality is significantly reduced, allowing businesses to survive and reach their potential.

The intervention by the British Retail Consortium and UK Hospitality marks a significant push ahead of the Budget. The two bodies represent some of the UK’s largest businesses, including Tesco, Sainsbury’s and Greene King. Across the eleven sectors of the UK economy, retail and hospitality pay the most tax. The majority of this liability is composed of value added tax, while employer national insurance contributions and business rates also form a significant portion. The industry bodies noted that retail and hospitality paid a combined 62 billion pounds in taxes in the recent financial year, despite being among the nation’s biggest employers. Beyond these two sectors, only information and communications and tech and sciences pay more than the average of 50p in every pound. Construction is identified as the least-taxed sector in the analysis.

The trade bodies stated that hospitality and retail firms are particularly exposed to the rising cost of doing business, a challenge that several City leaders have said must be addressed at the Budget. To achieve the aim of reviving British high streets, the British Retail Consortium and UK Hospitality said the Chancellor must exempt retail and hospitality firms from the high-value business rates multiplier. The government has pledged to review the way business rates bills are calculated for pubs and hotels, but industry figures have previously urged the Labour government to carry out its manifesto commitment of replacing the tax system. Helen Dickinson, chief executive of the British Retail Consortium, said the Chancellor faces a choice to either continue piling taxes onto high streets or give businesses the breathing space needed to create jobs and deliver growth. She warned that the punishing tax burden has clear consequences, including job losses and shuttered shops.

A government spokesperson responded by stating that the government wants business and communities to thrive. The spokesperson noted that over 750,000 retail, hospitality and leisure properties already benefit from lower business rates multipliers. It was also highlighted that the Chancellor prioritised support for the hospitality industry in his first week in the job by cutting business rates by 20 per cent for pubs, social clubs and live music venues. The spokesperson added that decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals.