Latest news with #taxincreases
Times
2 days ago
- Business
- Times
Ryanair drops three French airports in row over tax
Ryanair is scaling down operations in France because of tax increases, according to its chief executive, who accused the country's government of 'shooting itself in both feet'. In a characteristically combative interview with Le Parisien newspaper, Michael O'Leary said France preferred tax rises to economic growth. His comments prompted an angry response from Philippe Tabarot, the French transport minister. O'Leary said that Ryanair, Europe's largest airline with 200 million passengers last year, would cease services to three airports in France this winter and would reduce French flights by 13 per cent. • The best airlines in the world — according to you Ryanair is to stop flights to and from Bergerac and Brive airports, which serve the Dordogne, a popular holiday destination and home to many British expatriates. Flights to Strasbourg, in eastern France, will also cease. He said France's decision to increase its 'solidarity tax' on air fares, from €2.63 per ticket to €7.40, would make services to these airports unprofitable. 'This is a rise of 180 per cent and it's completely unjustified,' O'Leary said. 'You know what the French government has succeeded in doing in recent years? Shooting itself in both feet with these ridiculous and idiotic taxes on air travel. 'It isn't surprising that France is one of the countries that has recovered least well from Covid. France prefers taxes to growth.' O'Leary said Ryanair had proposed a five-year plan to the government to double the number of its passengers from 15 million to 30 million on French routes, on condition that France scrapped aviation taxes. 'We have less costly alternatives elsewhere, in other countries that realise the stupidity of French taxes.' He said six regions in Italy had cut or scrapped air travel taxes, which previously amounted to €6.50 on each ticket. 'We will simply move our planes to countries with lower costs. And if France responds to that by increasing taxes still further, we will reduce our services even more.' He also attacked French air traffic controllers over what he described as 'recreational' strikes, after Ryanair said it cancelled 170 flights. Tabarot rejected Ryanair's arguments as an 'excuse' and 'a strategy to exonerate it from its social and fiscal obligations'. • Alistair Osborne: EU tolerance of French air traffic control strikes is unacceptable He accused Ryanair of excessive cost-cutting but added: 'I haven't got a problem with an airline making a profit, which is the case for Ryanair, which has doubled its profits in a year.' Other airlines have also criticised France's taxes on air travel. Benjamin Smith, the chief executive of Air France-KLM, has described them as 'irresponsible'.
Times
17-07-2025
- Business
- Times
Frasers blames slowing profit growth on budget ‘dark clouds'
Mike Ashley's Frasers Group has warned that profits could decline in the year ahead, citing the 'dark clouds' cast by the chancellor's October budget and the threat of further tax increases. The owner of Sports Direct, Flannels and Frasers expects adjusted pre-tax profit this financial year to be in the range of £550 million to £600 million. The FTSE 250 retailer reported a 2.8 per cent rise in profit to £560.2 million for the year ended April 27. Chris Wootton, chief financial officer, said its guidance was cautious because of the 'drumbeats of doom and black clouds gathering for the next budget', as well as continued subdued consumer sentiment. • Business live: up-to-the-minute news and analysis from our live blog Frasers, one of the retail industry's largest employers with more than 32,000 staff, had blamed the UK government's tax rises for its profit forecast downgrade in December, saying that it felt 'kicked in the face' as the measures dampened consumer confidence. The group expects to incur at least £50 million of costs stemming from the 2024 budget. Wootton said he would urge the government to 'think about what you're doing' when asked about potential tax rises at the next budget. 'The national insurance increases are penalising industries like hospitality and retail, which have been under the cosh for many years,' he said. 'It showed a degree of economic illiteracy.' Frasers, majority-owned by the British businessman Ashley, is working to mitigate those cost pressures by using artificial intelligence and sustaining strong margins. • Mike Ashley abandons chase for Revolution Beauty It said the payment of dividends remained under review as it tried to preserve 'financial flexibility'. Ashley founded the retail empire with a sports shop in Berkshire in 1982. The group changed its name from Sports Direct after the purchase of the Frasers department stores. The group has struggled as shoppers cut back on clothing spend amid inflationary pressures and economic uncertainty. Group revenue at Frasers fell 7.4 per cent to £4.9 billion, largely driven by a 14.8 per cent drop in sales in the group's 'premium lifestyle' division, which includes the luxury Flannels chain and the House of Fraser and Frasers department stores. Sales at the core sports retail division, which includes Sports Direct and Evans Cycles, dropped by 7.2 per cent to £2.7 billion during the period. Wootton said sales at the start of the current financial year had been encouraging as consumer confidence improved from the lows during and after the UK budget last year. 'We're not going to jump up and down about it because we want to see if there's real structural change, but we have started seeing some green shoots in our premium lifestyle division,' he added. 'It's nice to see some green on the screen rather than red.' RBC Capital noted that Frasers contained 'a lot of moving parts but we think it should be relatively resilient, with good cash generation and asset value from strategic stake investments. Frasers is now more diversified meaning that it should offer protection from pressures on any one area of consumer spending.' As part of its strategy, Frasers has been acquiring stakes in other retail companies including Asos, Boohoo, AO World and Mulberry. Mulberry handed a board seat to Frasers this month as Andrea Baldo, its new chief executive, attempted to ease tensions with the major shareholder after a difficult period of falling sales and mounting losses. Wootton said it had taken Frasers years to get a board seat and it was a step in the right direction, but added that the business 'still needs work'. Shares in Frasers were flat at 649p in morning trading.
Bloomberg
15-07-2025
- Business
- Bloomberg
France's Government Risks Backlash With Stringent Budget Plan
By Prime Minister Francois Bayrou will outline a plan on Tuesday to sharply narrow France's deficit, setting the stage for a parliamentary battle that risks triggering another government collapse. The premier is set to present details of around €40 billion ($47 billion) of spending cuts and tax increases for 2026 that are needed to shrink the euro area's largest budget gap.
Telegraph
07-07-2025
- Business
- Telegraph
Wealth taxes and rent controls: what backbenchers want next
Days after Sir Keir Starmer was reported to be ready to block a wealth tax, pressure has mounted from Labour's union paymasters to bring in a such a levy. Lord Kinnock said the party was 'willing to explore' it. It is the latest humiliating signal that the Prime Minister has lost control of the Cabinet after his hand was forced on welfare. Sir Keir had to offer 11th hour concessions just 90 minutes before the vote last week, meaning his flagship legislation will no longer save £5bn. The backbenchers now know the power they wield. Alongside a wealth tax, they are eyeing up policies including scrapping the two-child benefit cap and introducing rent controls. Mike Warburton, The Telegraph's tax expert, said: 'The Government is unfortunately in a financial hole of its own making. It has become clear that the ministers are in hock to their backbenchers in attempting to make any meaningful cuts in spending. Tax rises are now inevitable.' Telegraph Money outlines the potential targets: Wealth tax A wealth tax has long been coveted by certain members of the Labour party. It is applied to the total value of an individual's assets, such as property, investments and savings. Rachael Maskell, MP for York Central who led the backbench rebellion on welfare, said the Government should 'scope out' how a wealth tax would work. 'We need to make the case that paying tax is good,' she added. Experts are anticipating tax increases to hit the highest earners. William Stevens, head of wealth management at Killik & Co, said: '[The Government] remains plagued by exceptionally limited fiscal headroom – put simply, the Government needs to raise money, and it's running out of avenues. 'Tax is ultimately the way to do that – both on the surface and by stealth.' Andy McDonald, MP for Middlesbrough and Thornaby East, was one of the 49 MPs who still voted against the welfare Bill last week. He told The Telegraph: 'I've made a case for the last six months for wealth taxes. I'll continue to do so in the next six months because it's right.' He has proposed a 2pc tax on assets of more than £10m, which is an idea being pushed by the Patriotic Millionaires UK. 'It is the broadest shoulders argument. 'Distributed to each according to his need.' That's not Marx, it's the Bible,' Mr McDonald said. Labour has pledged not to raise taxes for 'working people', and promised not to increase VAT, income tax or National Insurance in its manifesto. Freezing tax thresholds for additional rate taxpayers In May, Angela Rayner sent a memo to Rachel Reeves with 10 proposals for raising revenue. One of the suggestions in the leaked note was freezing the additional rate income tax threshold. The memo said: 'Continuing to freeze the additional rate threshold in case terms rather than uprating it with inflation from April 2028 could raise revenue and would be consistent with the manifesto.' The additional rate of income tax, 45pc, applies to income above £125,140. Ms Reeves has already refused to 'stand by the commitment' to end a freeze on income tax thresholds from 2028. She failed to rule out imposing a stealth tax on workers in October, instead referencing the '£22bn black hole in the public finances'. It means millions more households could be dragged into higher tax brackets. Stretching out the freeze on tax thresholds would also result in more retirees paying tax on the state pension. And while the Chancellor last year said she is 'not coming back with more borrowing or more taxes,' she may be left with little choice. After all, Ms Rayner was 'instrumental' in getting Sir Keir to gut his welfare Bill, The Telegraph understands, holding hours of crucial talks with Labour MPs. It means Ms Reeves may also be forced to listen to Ms Rayner when it comes to the looming Budget. Equalising capital gains tax Ahead of the last Budget, there were fears that the Chancellor would uprate capital gains tax in line with income tax. Instead, the rates rose from 10pc to 18pc for basic-rate taxpayers, and from 20pc to 24pc for higher-rate taxpayers. But the idea has gained traction again, with Mr McDonald suggesting it would be a viable way of balancing the books. Ms Maskell also told the BBC Radio 4 Today programme last week that a wealth tax or equalising capital gains could raise £24bn. Scrapping the two-child benefit cap The next policy that MPs will set their sights on is scrapping the two-child benefit cap. The cap prevents parents from claiming Universal Credit or child tax credit for more than two children. It was introduced by the Conservative Party in 2017. Speculation has been mounting that Labour will lift the cap after Nigel Farage, Reform UK's leader, called for it to be axed. Ms Maskell told The Telegraph: 'We need more positive intervention in politics, and should be investing to save money.' Last year, seven MPs had the whip suspended for six months after voting against the Government on an SNP amendment to reverse the cap. John McDonnell, the former shadow chancellor, was joined by Richard Burgon, Ian Byrne, Rebecca Long-Bailey, Imran Hussain, Apsana Begum and Zarah Sultana in rebelling. The End Child Poverty Coalition has found that reversing the cap would lift 250,000 children out of poverty. Rent control Landlords could be facing another blow under Labour if backbenchers call for further rent control. Ms Maskell said a quarter of her constituency lives in private rentals. She told The Telegraph: 'Rents are absolutely extortionate, and people are trapped in poverty. If we introduce caps on rent, the Government will also save money on the housing allowance.' Yet the move could backfire on renters and landlords, as has been the case in Scotland. In 2022, Nicola Sturgeon, former first minister, froze rent increases for six months before capping them at 3pc. But the cost of a one-bedroom flat surged by more than 20pc after it was introduced, according to Scotland's largest estate agent DJ Alexander. This was because landlords could still raise rents between tenancies. John Blackwood, of the Scottish Landlord Association, previously told The Telegraph that increased rent restrictions were the biggest concern. He said: 'Historically, lots of landlords haven't increased rent mid-tenancy, and have used the void period between lets to carry out improvements and reset the rent to market value. 'Landlords are concerned that without this option to reset rents to market value between tenancies, their properties will become increasingly unviable as costs increase at a faster rate than they can raise rents.' Landlords are already facing an increasingly hostile environment under Labour, after Ms Reeves increased stamp duty on buy-to-lets from 3pc to 5pc overnight in October. The Renters' Rights Bill is set to end fixed-term tenancies, prevent action being taken against non-paying tenants for up to three months and ban bidding wars. A third of landlords are now looking to sell off some or all of their rental properties, according to the latest English Private Landlord Survey.
The Independent
03-07-2025
- Business
- The Independent
For crying out loud: are you ready for the ‘politics of pain' about to hit us?
Keir Starmer promised that the last Budget would be 'painful'. In a speech in the Downing Street garden in August, two months earlier, he tried to manage expectations, saying that the state of the public finances was 'worse than we ever imagined', and asked people to 'accept short-term pain for long-term good'. It was a forlorn hope. Far from 'accepting' the pain, public opinion turned against the government further after Rachel Reeves announced £25bn a year of tax increases, rising to £40bn a year by the end of this parliament. Business leaders reacted particularly badly to the rise in employers' national insurance contributions, causing the chancellor to over-correct when she addressed the CBI the following month. She told representatives that she was 'not coming back with more borrowing or more taxes'. Oops. That was too categorical, and she immediately had to clarify: 'I do not plan to have another Budget like this. I have wiped the slate clean.' Within a few weeks, however, it turned out that it was a magic slate, which had filled up with new liabilities that would have to be paid for. Donald Trump had become president, threatening a global trade war and depressing economic forecasts. By the spring statement in March, the thin buffer between sticking to her fiscal rules and breaking them had disappeared, and she announced emergency cuts to welfare spending to restore it. Those cuts were reversed by the Labour rebellion in parliament this week, leaving more money to be found in the Budget this autumn. 'Of course, there is a cost to the welfare changes that parliament voted through this week,' Reeves said in a round of TV interviews to show a brave face after her tears in the Commons yesterday, 'and that will be reflected in the Budget.' It has been clear for months now that taxes will have to rise further. But now it is becoming obvious that the tax rises will have to be substantial. Ben Zaranko of the Institute for Fiscal Studies said yesterday: 'It's not hard to imagine a world where they are of a ballpark similar scale to last autumn. If you have the perfect storm of economic forecasts being downgraded, additional spending commitments because these reforms haven't got through parliament, and the world is in a gloomier place generally, you could comfortably be into double-figure billions even before you talk about any retail offers. A £20, £30, £40bn Budget is not what the government would want, but it's not impossible by any means.' Needless to say, this is a political disaster. Mixing her metaphors, Reeves claimed last year not just to have wiped the slate clean but to have fixed the foundations. Now she is going to have to report that the problem of subsidence has not in fact been solved and that further work on the foundations is needed. Last year, Starmer was accused by the commentators, including me, of overdoing the gloom. Reeves was accused of depressing the economy by talking it down. Now it turns out that neither of them was gloomy enough. But where they have still failed is in setting out what the eventual reward for all this pain might be. When Margaret Thatcher administered her monetarist medicine in 1979-81, many economists thought she had overdone it and caused unnecessary hardship, but her aim was clear: to squeeze inflation out of the system by weakening the trade unions and stimulating the supply side. I never liked her rhetoric of strength through suffering. In 1980, she compared herself to a nurse looking after an ill patient: 'Which is the better nurse? The one who smothers the patient with sympathy … Or the nurse who says, 'Now, come on. Shake out of it.' … Which is the one most likely to get results? The one who says, 'Come on, you can do it.' That's me.' But when the economy picked up in 1982-83, enough of the voters felt that the hard times had been worth it. That was why Starmer, Reeves and Wes Streeting launched the 10-year NHS plan today. It was designed to sell the message that the pain of tax rises will be worth it if the health service can be made to work again. A functioning NHS is Labour's equivalent of 1982's economic recovery. But we have had the pain, and although the NHS may have stopped getting worse, it is still some way off getting better, and now Reeves is indeed coming back for more tax rises – and on a scale that makes it hard for her to avoid hurting people on middle incomes. Starmer and Reeves have been unlucky to take power with the public finances in a uniquely dreadful state. They ruled out tax rises so that they could win the election, then had to put taxes up. They said that this was a one-off fix to 'restore stability', but now they are coming back for more. Reeves's tears in the Commons were an unfortunate image, and it is unfair on her, but it is an image that sums up the government's predicament all too well.
