Tax hike and job losses

Retailers: Tax hikes will mean job losses and price rises

Retail bosses have told the Chancellor that they will be forced to increase prices and cut jobs due to tax hikes set out in last month’s Budget. In a letter co-ordinated by the British Retail Consortium (BRC), retail bosses warned that job losses were “inevitable” and higher prices are a “certainty.” Highlighting the “sheer scale of new costs” and the “speed with which they occur,” signatories said: “It will not be possible for businesses to absorb such a significant increase to their cost base over such a short timescale.” The BRC has estimated that an increase in employers’ National Insurance contributions and a lower wage threshold for the tax will see retailers’ tax burden jump by £2.3bn a year. While brokers at Peel Hunt estimate that retail firms will see pre-tax profit fall by an average of 7.5% as a result of the tax increase, analysts at Panmure Liberum say the tax hike combined with a minimum wage increase could knock 10% off retailers’ pre-tax profit. Meanwhile, more than 200 hospitality bosses have told the Chancellor of their “grave fears” about the impact on the sector, which they estimate will incur nearly £14bn of extra costs during this parliament, voicing concern in a letter orchestrated by lobby group UKHospitality.