Retailers have given the Emergency Budget a resounding thumbs up, despite the painful
fuel price hikes that are on the way. The main concern from the Chancellor’s announcement on June 22was the planned hike in VAT. Retailer Simon Hockings, who runs AUK Investments, which has six forecourts
in the Lake District, said: "The VAT rise is obviously not too good news for any of us. Come January, I think we’ll have to put our prices up in the shop to take account of the extra VAT.
"And of course it’ll affect fuel prices in a big way too.
"I can kind of understand where the government is coming from though. There’s a huge black hole and they have to take steps to sort it out.
"However, on the positive side, I do think the moves on corporation and small business taxation are very encouraging. It’s good that the new government is trying to help smaller businesses to be able to take on more staff."
Anis Patel, director at Bolton-based Aleef Garages, agreed that the measures would make things more difficult for retailers but said they were a necessary evil. He added: "VAT is obviously the big thing that’s going to be a bit of a nightmare because it will add another 2.5% to fuel, on top of the extra duty due in October and January. It’s a hidden tax really. I think there’s a lot of give and take with this Budget, but overall it’s not as harsh as it could have been."
Retailers were relieved the VAT hike would not be implemented immediately and that there were no changes to alcohol or tobacco duty.
Peter Brough, of Manor Service Stations, said: "These moves are necessary. There wasn’t an increase in fuel duty so that was good news. It’s going to be very painful for us all, but I’m in favour of what the government’s doing."
However, Brian Madderson, chairman of RMI Petrol, said the government had let retailers down. He explained: "Where was the Lib-Dem pre-election commitment to give the rural motorist a better deal? Where was the Conservative proposal to consult with industry over a ’fuel price stabiliser’ mechanism? The Chancellor blatantly ignored these commitments."
Here are the main aspects of George Osborne’s Emergency Budget for fuel retailers:
l VAT will rise to 20% from January 4, 2011.
l No extra duty on fuel but the government will stick to the Labour plan to add 1ppl from October 1 this year, and a further 0.76ppl from January 1, 2011.
l Reductions in the rate of corporation tax of 1% per year from 2011 to 2014.
l Cut in the Small Business rate to 20% from April 2011.
l Reduction in National Insurance contributions for businesses outside London and the south east of up to £5,000.
l Reversal of previous increases in Cider Duty but no further changes to alcohol or tobacco duty. However, the ACS noted that there would be a review of alcohol taxation linked to binge drinking reported to the House in the autumn.