New Labour Government Tax Rethink

LONDON (Reuters) – The new Labour government must reconsider the timing of tax increases from last month's budget and consider a phased approach to avoid inflation, according to Andrew Higginson, chairman of the British Retail Consortium (BRC).

The recent budget raised employers' National Insurance contributions by 1.2 percentage points to 15% from April and lowered the payment threshold from 9,100 pounds to 5,000 pounds. It also raised the minimum wage for most adults by 6.7% starting in April.

Higginson, who chairs the BRC and is also a leader in the FTSE 100 sportswear retailer JD Sports, indicated that factoring in higher business rates could result in a £5 billion annual hit to the UK retail sector. He advocated for these tax increases to be phased in over two to three years to mitigate inflation risks.

He expressed concerns that without gradual implementation, significant price inflation would follow. Higginson outlined two primary responses retailers have to increased taxes: reducing investments and jobs or raising prices.

Major retailers, including Primark, Marks & Spencer, and Sainsbury's, have highlighted difficulties in absorbing new budget costs. Higginson noted that the Labour Party had previously promised support for businesses, contrasting this with the current taxation approach.

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