Britain’s food wholesalers have threatened to seek a judicial review if Chancellor Rachel Reeves gives supermarkets a tax break in the budget.
According to recent report, wholesalers body Federation of Wholesale Distributors is taking legal advice after a report that the chancellor could exempt large retail premises from paying the top tier of business rates.
Wholesalers argue that doing so would be anti-competitive and could affect the parts of the public sector they supply.
“The impact of such an imbalance will see food and drink supplied into hospitality, public sector and independent convenience store settings inflate as wholesalers look to pass through the jump in business rates," The Times quoted James Bielby, the chief executive of the federation, as saying.
“However, price rises are not always possible to put through in the public sector. Instead, settings such as schools and hospitals are likely to see a reduction in quantity and quality as a direct result of the tax burden.
“Food and drink wholesalers operate on wafer-thin margins. There is no slack to absorb yet another tax hike.
"Public sector food supply will be pushed to the brink. That is why legal action must be explored as a priority.”
Chief executive of Bidfood UK, which supplies food and drink to 45,000 pubs, hospitals, schools and other clients, said, “If supermarkets are getting exemptions, then so should we. If we can’t afford to run our depots, the country won’t eat.
“This is not a tax on profit, it’s a tax on the operations that keep food moving from farm to fork. Meanwhile, supermarkets could end up exempt. That’s not just unfair, it’s dangerous. It hands them an inbuilt cost advantage over the businesses that serve the rest of the food system."
Meanwhile, supermarkets and bigger retailers are calling on for exemptions in the upcoming budget citing the warnings that increasing their business rates would affect food price inflation.
The Treasury has neither confirmed nor denied that such a deal will be granted.
Responding to the wholesalers' request, the government said: “Tackling food inflation is a priority, which is why we’re boosting incomes through increasing the national living wage, lowering business rates for butchers, bakers and other shops, and sticking to our fiscal rules to bring inflation down.”