Employment measures for retail
With the Government indicating that the path out of lockdown will be long, the Chancellor should consider keeping flexible furlough in place for the retail and hospitality sectors for the rest of the year so that businesses can grow their way out of recession.
The Government should consider an employer’s National Insurance holiday for small retailers as a means for them to maintain employment as we emerge from lockdown.
Cash measures for retailers
The Government should encourage consumers to shop local and support small retailers by allowing a targeted VAT cut of 10%, half of which would be passed on to the consumer and the other retained by the retailer. Consumers have saved cash over the year, so although they do not need an incentive to spend, targeting measures at small independent retailers will help those businesses survive and retain the high street.
Retailers should be allowed to defer VAT payments due from 31 March 2020 for another year so that they have time to recover cash resources which have been depleted by the pandemic.
Retailers should also be allowed to surrender losses incurred in the financial year just ended and ending for an immediate cash payment from HMRC. The mechanism should allow for estimated returns to be submitted and then adjusted when accounts and tax returns are finalised. The advantage is that it allows for an immediate cash payment to the retailers but also because all the loss is surrendered allows for that advance to be ‘repaid’ earlier as all the losses are utilised.
Incentives to encourage investment
Grants should be made available for small and independent retailers of up to £50,000 to allow them to invest in their premises and develop an online presence and distribution channel so that they can compete with larger retailers.
Tax raising measures
While some retail businesses have suffered in the pandemic a small number of large online and traditional retailers have benefitted from lockdown. The Government should consider a one-off super profits tax on those retailers as a one-off tax to fund the NHS.
Long-term review of funding of local government
For the retail sector, it is essential that the rates relief is extended and ultimately reformed to enable businesses to get back on track when lockdown ends.
The Government needs to use the budget as an opportunity to announce a long-term review of local government funding and the rates system to address the structural changes that are affecting the retail sector.
At the moment, traditional retailers are being hit by a double whammy as the rateable values were set when retail property values were high and has increased out of step with retail profits. Maintaining rates at this level will lead only to the closure of an ever-increasing number of stores on our high streets.
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