Retailers 'hit hardest by growing tax burden'

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The Independent Online

The tax burden faced by big retailers has soared by almost two-thirds since 2005, highlighting the uphill battle faced by chains to maintain profitability during the consumer downturn.

The accountancy firm PwC has revealed the UK's major retailers are now staring at a total tax rate of 59 per cent, against 39 per cent among the rest of the 100 large companies it surveyed. The bulk of the increase for retailers has been driven by soaring business rates, property taxes linked to rateable value of commercial premises and the Retail Prices Index measure of inflation.

For every £1 of corporation tax paid, retail chains now fork out almost £2.40 in other taxes, of which business rates account for £1.44 and employers' National Insurance contributions for 64p. Mary Monfries, the head of tax policy at PwC, said: "The rise in business rates in particular is felt by retailers given their large property portfolios."

While corporation tax paid by retailers has increased by just 11 per cent since 2005, other taxes have jumped by almost 80 per cent over the period.

At a time of a huge shift to online retailing and largely flat consumer spending, rising taxes have become a major bugbear for retailers with physical stores, and are often cited by chains that collapse into administration.