Chancellor John Healey is set to meet retail and hospitality leaders this week amid growing concerns over potential tax increases targeting large businesses ahead of his first Budget later this month. Reports indicate that Healey has ruled out introducing a new "warehouse tax," which had been widely expected to target large commercial properties, including warehouses and distribution centres, in an effort to fund business rates cuts for smaller firms such as pubs, clubs, and music venues.
The proposed warehouse tax, initially dubbed the "Amazon tax," was intended to shift some of the tax burden away from traditional high street retailers to online businesses with substantial warehousing operations. However, major retailers have warned that the measure could inadvertently harm established physical stores and their supply chains. Jason Tarry, chairman of John Lewis and Waitrose, cautioned that imposing additional taxes on large stores could trigger a wave of shop closures, ultimately damaging high streets and the smaller businesses that rely on their presence.
Stuart Machin, chief executive of Marks & Spencer, has also been critical of previous fiscal policies, describing the last two Budgets under Labour government as "disasters" that introduced £75 billion in extra taxes on firms and families, hindering economic growth. Machin urged the Chancellor to reverse these policies, emphasizing the need to "take the handcuffs off business" and restore confidence in the economy.
Business groups, including the British Chambers of Commerce, echoed these concerns, warning that further tax hikes would undermine Britain's economic prospects. Kate Shoesmith, director of policy at the Chambers, stressed that the Chancellor must focus on reducing business costs to foster growth. Similarly, shadow Chancellor Andrew Griffith criticized increased tax and regulatory burdens for contributing to rising unemployment and economic stagnation.
Despite these warnings, Labour officials, including Prime Minister Andy Burnham, have indicated that supporting sectors seen as socially beneficial requires rebalancing the tax system, though exact details of any new measures remain unclear. Healey is now balancing these competing priorities amid a fiscal environment constrained by surging borrowing costs that have reduced the available budgetary headroom to £12 billion.
An HM Treasury spokesman emphasized the government's commitment to creating conditions conducive to investment and job creation, referencing recent measures such as business rates cuts, a corporation tax cap, and a £4.3 billion support package aimed at helping firms manage costs. Treasury sources declined to comment specifically on any tax proposals, underscoring that decisions will be announced with the Budget.
Meanwhile, some business leaders and economists have called for caution, warning against introducing new taxes that could stifle growth or trigger another financial market crisis similar to the events following the 2022 fiscal turmoil. Lord O’Neill, a former adviser to Mr. Burnham, described further wealth or business taxes as potentially “stupid,” urging the Chancellor to avoid damaging the economic recovery.
With the Budget scheduled for later this month, Healey faces significant pressure to balance fiscal responsibility with the need to support businesses and safeguard Britain’s high streets amid an ongoing cost-of-living crisis and economic uncertainty.