The boss of Tesco has warned the government against adding extra costs to UK retailers in the upcoming Budget, saying “enough is enough”.
Ken Murphy said he did not want to see a repeat of the last Budget, when “the industry incurred substantial additional operating costs”.
His comments came as the UK’s largest supermarket upgraded its profit forecast for the year.
Chancellor Rachel Reeves will reveal her Budget on 26 November, with the widespread expectation that some taxes will increase.
Many retailers have argued they have been hit with a wave of extra costs since April, including increased employer National Insurance contributions (NICs) and higher minimum wages.
In addition, Tesco and other food and drink companies are now charged for the cost to councils of recycling the packaging of some of its products, under the government’s Extended Producer Responsibility (ERP) programme. The company said it had set aside £90m in ERP levies, which came into force last month.
The Food and Drink Federation (FDF) has predicted this tax will cost UK producers £1.1bn, more than the impact from the hike in NICs.
Jim Bligh, head of corporate affairs at the FDF, told the BBC earlier this week that most of those taxes would be passed on to shoppers.
“So inevitably that means that food prices will increase as a result of these decision by successive governments over the years,” he said.
Mr Murphy said the new and higher taxes were “an additional burden on the industry. As was the increase in NICs. As is higher commodity prices. There’s a raft of factors impacting the cost of doing business”.
Tesco said the higher National Insurance rate cost it £235m this year.
Regarding the upcoming Budget, Mr Murphy said: “Our one ask is don’t make it harder for the industry to deliver great value for customers.”
The Tesco chief executive’s warning follows similar interventions from other retailers.
Earlier this week, the British Retail Consortium said that “any further tax rises in the upcoming Budget would keep shop prices higher for longer”.
A Treasury spokesperson said: “The tax decisions we took at the Budget last year mean that we have been able to deliver on the priorities of the British people, from investing in the NHS to cut waiting lists and putting more money in their pockets with a wage boost for millions.”
They added that the government has capped corporation tax at 25% and was reforming business rates.
Mr Murphy’s comments came as the retail giant upgraded its profit outlook for the year, saying it now expected to see full-year adjusted operating profits of £2.9bn-£3.1bn.
Tesco said that although intense competition had led it to cut the price of 6,500 items, shoppers were adding more to their baskets and therefore its profits were set to increase.
The Unite union said Tesco had “profited from the cost of living crisis”.
Unite general secretary Sharon Graham said: “As millions of workers struggle to put food on the table, Tesco is raking in huge amounts of cash and paying out whopping dividends to shareholders.
“It is time the Labour government stops being missing in action when it comes to tackling profiteering. Workers must no longer pay the price for corporate greed.”
Mr Murphy said sales data suggested more shoppers were buying more fresh ingredients to cook meals from scratch, possibly in order to save money.
The cost of food and non-alcoholic drinks grew across all retailers at an annual rate of 5.1% as beef, butter, milk and chocolate prices continued to surge, official data for August showed.
Mr Murphy said Tesco – which has about 28% of the UK grocery market – was raising prices at a lower rate than the market average.
Households might be holding off on spending until after the chancellor sets out her tax and spending plans, Mr Murphy said.
“They are concerned and worried about the Budget and the economic outlook,” he added.
