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Retail Taxes Likely To Affect Consumers, Retailers: EuroCommerce

Published on Nov 22 2019 9:40 AM in Retail tagged: EU / EuroCommerce / Lithuania / Retail Tax

Retail Taxes Likely To Affect Consumers, Retailers: EuroCommerce

Retail taxes proposed by EU member states are likely to put retailers out of business and increase consumer prices, the EuroCommerce has said.

EuroCommerce is the body that represents the retail and wholesale industry in Europe.

Most recently, Lithuania proposed a retail tax of 1% on consumer sales for businesses with a turnover threshold of €2 million a month.

Earlier, Hungary, Poland, and Slovakia, had also proposed retail taxes based on turnover, the EuroCommerce highlighted.

Executive director of the Lithuanian Association of Trade Companies, Rūta Vainienė, said, "It is unclear how the proposed retail tax in Lithuania will improve consumer choice and help retailers keep prices low for Lithuanian consumers. It is unclear why the lawmakers have singled out the retail sector, which has low-profit margins.

"We call upon the European Commission and our Government to be vigilant and protect the interest of Lithuanian consumers, and ensure that Lithuanian retail businesses remain competitive."

'Unlawful State Aid'

The EuroCommerce pointed out that the European Commission had concluded that most of the taxes introduced by EU states on retailers constitute 'unlawful state aid'.

Director-general of EuroCommerce, Christian Verschueren, commented, "Retail businesses are closest to consumers, and especially in food, they operate with very low average margins of 1 to 3%. At the same time, retailers are major local employers and support local communities and businesses. They source locally on average 70% of the products they sell.

"Turnover-based taxes will either lead to retailers having to absorb the cost, renegotiate conditions with suppliers or increase consumer prices. It is unclear what member states want to achieve with these taxes."

The Court of Justice of the European Union also concluded that the Hungarian retail tax of 2010 was 'indirectly discriminatory'.

Restrictive Laws

States that have proposed retail-specific taxes have also introduced other types of restrictive laws, the EuroCommerce noted.

These include regulation of B2B relationships to the benefit of large international suppliers, providing advantages for local products vis-à-vis products from other EU States, making larger retailers subject to competition law restrictions, regardless of their real market power, and restricting the establishment, reconstruction, or expansion of stores.

Such measures undermine the single market and create a hostile environment for new players, resulting in less competition, higher prices, and fewer choices.

© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Dayeeta Das. Click subscribe to sign up to ESM: European Supermarket Magazine.

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