I’m not convinced on Reeves and the budget but I do wonder how much of the moaning from the retail sector is just performative (like the farmers). The Tax burden in the UK is fairly middle of the road, yet those countries with higher tax have retail and leisure businesses working fine. Plus more than 50% of companies are getting a tax cut due to the exemption for smaller businesses.
Personally I think Labour should have said at the election they were going to return NI to the level it was before the Tories did their un funded tax cuts, and tinker with other taxes on employers. But I do wonder if it’s as bad as some companies are making out.
I am convinced with Reeves and I believe she has the skills and the talent, and she is mostly being attacked by populists and a hostile press for being the bearer of bad news that eminatated from the worst government that this country has seen in most of our lifetimes.
However, her and Starmer need to shoulder the blame for the rediclous tax promises they made before the election. At a time when it looked increasingly likely they would win and win big, they made completely nonsensical promises about not raising personal taxes for "working people", when not only were people expecting it to be an inevitably, but were actually warming to it. A golden opportunity and reality check missed.
There will be a great deal of performative complaining from retail and hospitality, I have no doubt. There always will be from something like this.
The NI rise also seems well intended. Make employers who use cheap labour pay for it another way.
But Bob, the owner of the local chippy, and Rob, the owner of the local corner shop, will still employ teenagers on a pittance. They're small businesses so will reluctantly use their new tax reliefs and price rises to pay for it.
Secretive foreign based companies, who aren't registered in the UK like Amazon, Coca Cola, and Aldi will likely complain and alter their tax affairs to foot the bill. They'll too rise prices (already are actually). They'll still make their margins somehow.
But London based M&S, London based Kingfisher, Welwyn Garden City based Tesco, Leeds based ASDA, Poole based Merlin Entertainments, Dunstable based Whitbread, and Bradford based Morrisons? Well they're the bad guys aren't they! Big businesses, registered and pay their taxes in the UK, all sell either human essential commodities and;or homewares from bricks and mortar stores, or mainly UK based hospitality/leisure. None have a clean ethical reputation, but I suppose that's far easier to ascertain when you have to register your annual reports here for all to see.
Yet again, the foreign multinationals like German discount supermarkets (where the food retail industry is less competitive, the industry is a smaller part of their national economy, choice is more limited, and store bought food is generally more expensive), Amazon (a terrible employer who is shy of paying taxes), and McDonald's corp (where do I start?) have options, whilst the false "greedflation" finger is pointed at service industry companies that were stupid enough to actually still trade here.
As very large private companies, they will of course pay the minimum wage or above, pay their extra employer NI contributions, and corporation tax on their profits. Their CEO's will earn large salaries and sleep well at night in luxury, and their Investors will be prioritised above anyone else. This will all be done with branch closures, job losses, price rises, and general productivity savings. Bearing in mind that the service sector, where most of these jobs are, makes up 80% of the UK economy and it's productivity increases over the last 20 years puts the secondary, primary, and public sectors to shame.
But the "(insert local town name here) Live" Reach websites will report of "popular" branches closing, with "the loss of many jobs", whilst the right wing tabloids will continue the attack at a national level, and politicians of all colours will club together and make false accusations of "profiteering" to hide their own crudelity.
I hope this employers NI grab is just an easy way of generating tax receipts in the short-term to pay the Tories overdue credit card bill, whilst technically not breaking a foolishly made election promise. But it remains by biggest concern of any decision the new government has made to date.
Employers should absolutely be paying higher wages and more tax. But this feels like a blunt instrument. The government needs these companies, especially the UK based ones, for growth and productivity. It's in their interest to have large service sector companies and employers based her in the UK, that are successful, employ a lot of people, and are exportable.
Whilst Tesco have sacrificed margin to soak up inflationary pressures for consumers in the most competitive retail market in the world, Amazon continue to pay a smaller amount of tax here as % of their revenue. You won't find an annual report anywhere for Aldi, but you'll be able to pour over the details for Kingfisher and Whitbread PLC.
Easy targets, that's why they went for them.
It isn't a one size fits all. I'm sure many will be pleading business poverty unnecessarily, but the facts are out there for UK based bricks and mortar companies, they aren't so much for these dodgy foreign competitors that seem to get a free pass.
They should be encouraging large UK employees to pay high wages, keep prices low, and pay taxes. They should be encouraging small and medium sized businesses and entrepreneurialism. They should not be getting a blunt instrument and hitting huge sectors on the head with it indiscriminately.
I'm hoping this was just a one-off tax grab out of desperation. Some business that can weather the storm seem to think so. But it doesn't scream economic growth to me at the moment.