ACS

In his pre-Budget report to the House of Commons today, the Chancellor ignored calls for a delay in the reinstatement of the 17.5% VAT rate to February to ease the strain on retailers over the Christmas period.

ACS Chief Executive James Lowman said: “Retailers are exceptionally disappointed by the Chancellor’s decision not to extend the 15% VAT rate beyond January 1st. The date of the increase does not give retailers adequate time to implement the changes over the holiday period,  and applies a major bureaucratic burden on retailers in what is the busiest time of the year.

“The immediate cost of the change will exceed £8million across the convenience sector industry”

As well action on VAT, local shops had called on the Chancellor to:

• rebalance tobacco and alcohol duty to cancel out the upwards adjustment made in last year’s pre-budget to account for the decline in VAT
• reconsider the decision to impose a hike in national insurance on employers in 2011

Mr Lowman expressed further concerns: “The failure to readjust alcohol and tobacco duty to compensate for the VAT hike is a tax grab that harms consumers and retailers alike.

“Instead of recognizing that an increase in national insurance is an unhelpful tax on jobs, the Chancellor has doubled the tax hike. This will threaten local shops ability to provide valued jobs in the community.

Finally Mr Lowman welcomed the freeze on corporation tax for small businesses: “The Chancellor’s decision to defer the increase in corporation tax for small businesses is a welcome measure, and will offset some of the additional cost burdens announced in this budget.”