The “arbitrary” decision to impose a 31 December deadline for the VAT hike and the end of trade credit insurance support threatens to undermine the Christmas trading period, experts have warned – so The Grocer has launched a campaign to fight it.

‘Push Back the Tax’ calls on The Chancellor to delay a series of tax hikes and the expiry of key financial support (see box). The campaign comes as retailers prepare to implement a hike in VAT in the middle of the most important trading week of the year.

As if that weren’t enough, on that same day the government’s trade credit insurance scheme is due to be withdrawn, sucking working capital out of suppliers hands just when it’s most stretched. And as a New Year’s kicker, just a few months after the VAT increase causes a de facto alcohol duty rise, the duty escalator will actually increase drinks prices twice – just as volumes are falling across the category.

The Grocer is calling on the government to hold off its VAT hike for just a few short weeks and put it through during a quiet trading period. We’re also calling for an extension of trade credit support, and for the government to stall the booze duty escalator for one year. The campaign has already drawn support from industry leaders and trade associations, as well as warnings of the consequences of the current timings.

“Increasing VAT on New Year’s Eve is a bad day to do it. In fact there probably is not a worse day of the year from a retailer’s point of view,” said Sainsbury’s CEO Justin King. “It will raise costs, because a lot of work will have to be done on overtime. The Government should be looking for a more practical low-cost date to raise the rate.”

ACS chief executive James Lowman said just a few weeks’ delay could make a significant difference to independents at Christmas. “The decision to impose a VAT hike in the busiest, most stressful trading period shows government does not understand business pressures.”

The BRC said the government should impose a duty freeze to avoid looking as if it was passing on stealth tax rises. “I’m sure government wouldn’t want to be accused of using last year’s VAT cut as cover for sneaking in an extra alcohol duty increase,” said director of business environment Jane Milne. “Given duty was raised last year to eliminate the benefit to customers of the VAT cut, it’s only fair it’s frozen this year when the old rate is restored.”