hospitality and retail leaders said the chancellor’s economic plan failed to address the business rates or VAT needed to support the high street.
In his mini budget, Kwasi Kwarteng introduced a tax-free shopping declaration, a freeze in duty on beer, cider, wine and spirits, and confirmed energy support for firms.
Business leaders welcomed these actions as part of the new plan Govt hopes will lead to sustainable economic growth of 2.5%.
However, there has also been considerable criticism that additional support is needed for parts of the economy that have been hit hard by the pandemic and are likely to come under pressure from tight household budgets.
Kate Nicholls, Chief Executive Officer UKHospitalitysaid: “The chancellor has sought to make the UK a globally competitive tax regime, but has overlooked two obvious levers to achieve this, through cuts in VAT and business benefits.
“Our VAT rate is the highest in Europe, which is at odds with global tax competitiveness ambitions and will hopefully be addressed in the Autumn Budget, if not sooner.
“While tax-free shopping for foreign customers is a welcome step to attract foreign tourists, a much more effective step would be to reduce VAT for our domestic customers.
“Our VAT rate is the highest of any economy today, so if we want a globally competitive market, we need lower VAT and a fair alternative to business rates.”
Today’s announcement made no mention of business rates, which are due to jump by 10% next April, leading to an unaffordable £800m tax hike on already-squeezed retailers.
Retail leaders have also called for action on business rates ahead of what is expected to be a big rise in bills next year.
Helen Dickinson, chief executive of the British Retail Consortium (BRC), said: “Retailers are facing huge cost pressures, not just from energy bills but also from a weak pound, rising commodity prices, high transport costs, a tough market labor and the cumulative burden of government spending.
“However, what was absent from today’s announcement was any mention of business rates, which are due to jump by 10% next April, leading to an unaffordable increase in tax on already squeezed retailers yet by £800m.
“It is inevitable that such additional taxes will eventually be passed on to families in the form of higher prices.”
Experts Altus Group has predicted that overall business rates should jump by more than £5.3bn once the end of discounts for retail, leisure and hospitality firms is taken into account.