Thursday, November 17, 2005
Overtaxed nation
Signs of an overtaxed nation?
Being involved in retail at the Corner Shop teaches you a thing or two about life, politics, economics, and the bigger picture.
Taking a stroll through South Shields town centre at lunchtime today I noticed that diy giant B&Q was offering 10% off everything this weekend, (I understand that this is the third such event that they have had in the past couple of months), Woolworths were also offering 10% off everything, Marks and Spencer were announcing that they were now opening on Sundays (they have never been keen in the past) and Christmas gifts could be had at three for the price of two , W H Smith were selling all of their hard backed books at half price, and the sports shop opposite had reduced it's sale items by a further 50%.
It seems just the right time for the clever shopper to pick up a real bargain! However all is not well within the retail sector of the U.K. very few of our high street shops have reported any growth in profits over the past twelve months, the exceptions being Tesco, Debenhams, and to a lesser extent Marks and Spencer. Most retailers are reporting like for like sales reduced by almost 3% compared to last year and the trend towards lower prices, discounting, and special events is likely to continue as they struggle to increase footfall. This lack of boyancy or retail "buzz" is not restricted to the regions, but is also very prevalent in the nation's capital, London, where, despite the influx of foreign visitors and a wealth of attractions, there is still stagnancy in the retail market.
B&Q's parent group Kingfisher recently reported sales down 3.4% like for like, pretax profits down GBP 78 million, and Woolworths reported losses increased to GBP 36 million,and like for like sales down 4%.
So, we see up and down the nation, like for like sales are less than last year, retail profits squeezed, and yet at the same time personal debt is rising at an alarming rate! (Total consumer credit lending to individuals in September 2005 was GBP190.8bn., total lending in September 2005 grew by GBP9.0bn.)
What does this information tell us?
Yes, it tells us that there is a lot of "buy now pay later" going on; but if there is no growth in retail sales value, and wages are only growing by an average 2% per annum, savings, pensions, and investments are suffering, and the household final consumption expenditure is also heavily squeezed, it tells us that our disposable income is going elsewhere not into the cash drawers of the retailers!
So where is it going? Who is the benefactor of our hard labours? Who is gaining a growing proportion of our wage?
The answer is the Treasury and your local Council; the solid indications are that the decline in household final consumption expenditure, and the decline in retail growth and the increase in personal debts are a direct result of a nation suffering from over taxation. For every extra pound taken in taxation, you have one less to spend in the shops, and our taxation is taken from an ever increasing variety of sources now (p.a.y.e., national insurance, road taxes, tv licence fees, Council tax, VAT, excise duties, death duties, inheritance tax, etc., etc., - ad nauseam.)
Yet, as we spend less and borrow more, New Labour presses ahead with plans to tax us even more heavily, the delayed revaluation of property will go ahead in 2007 after Council taxes rise by an average 10% in 2006, plans to introduce an identity card scheme will see fruition with us paying for it, and motorists will face more congestion charges, speed cameras, and toll roads.
With government taking an ever increasing slice of the nation's pie, it's difficult to see where the next meal will come from. We rely on a growing economy to provide revenue for increased service spending, but this strategy is put at an ever increasing risk by such heavy levels of taxation.
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Curly Born in 1956
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