Emergency Budget: Focus on spending cuts, not tax hikes

7 June 2010

Ahead of this month’s Emergency Budget, the British Retail Consortium (BRC) is calling on the Chancellor to build on the Government’s initial approach of focusing on public spending cuts over tax rises to tackle the deficit, but cautions against making reductions too quickly.

In its Budget submission, published today (Monday), the BRC says it supports the Government’s aim of seeking an 80:20 split in public cuts relative to tax increases. The retailers’ organisation also believes halving the deficit over four years strikes the best balance between the need to reduce the deficit in the short-term and support strong economic growth in the long-term.

Stephen Robertson, British Retail Consortium Director General, said: “The sheer size of the deficit means action must be taken, but the response mustn’t harm the fragile recovery.

“It’s the right approach to focus on public spending cuts, rather than tax increases. But the Government mustn’t risk cutting too quickly. The best way to protect long-term growth is to halve the deficit over four years, rather than three.

“VAT shouldn’t be increased as it would have negative impacts on retailing and the wider economy. Zero-rated items, such as food, books and children’s clothing, shouldn’t have VAT applied to them as it would hit the most vulnerable members of society the hardest.

“The latest figures show tax avoidance costs the economy around £40 billion in lost revenue every year. We welcome the Government’s proposal to take a tougher stance on tax evasion and believe more resources should be devoted to improve the payment level of money owed.

“The Government must make long-term decisions that result in a consistent and predictable business environment – this will encourage investment.”

In addition to addressing the public finances, the BRC has identified key areas to help retailers contribute to sustained recovery through their vital role of maintaining and creating jobs.

The BRC is calling for:

Future increases in the National Minimum Wage to be no higher than average earnings in the wider economy;

All businesses affected by Business Rate Supplements to be given a mandatory vote before the levy can be applied – a move the Conservatives supported in opposition;

The Better Regulation Executive to be given the power to prevent the introduction of new regulations that do not improve existing measures.

Stephen Robertson, British Retail Consortium Director General, said: “It’s the private sector that will drive the UK on the path to sustained recovery, with retail playing a crucial role.

“Retailing is the UK’s largest private sector employer with nearly three million people working in the industry. Placing damaging new costs onto retailers, big and small, will hamper their ability to maximise their contribution to the recovery. The Chancellor must help retailers continue to maintain and create jobs.”

In its Emergency Budget submission, the BRC is also calling on the Government to:

Consider a scheme to subsidise early investment in new innovative low-carbon goods and services;
Ensure investment incentives for retail-led regeneration of high streets and town centres are protected, such as avoiding additional development costs.

Emergency Budget submission

http://www.dodsmonitoring.com/downloads/Misc_Files/BRC_Budget_2010.pdf

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