A supermarket giant has come under criticism for exploiting a tax loophole that allows it to price out independent record stores.
The Forum of Private Business (FPB) is calling on Chancellor Gordon Brown to restrict Tesco from selling cut price CDs and DVDs online from Jersey without charging VAT.
Jersey places no VAT on goods sold there and as long as items cost less than £18, Customs and Excise cannot impose the tax.
This means that Tesco Jersey, a website set up by the supermarket chain, can sell CDs for as little as £8.99 and DVDs for £11.89, prices that small record stores cannot compete with.
Les Hare, owner of Kingbee records in Manchester, said: “Of course our business is being affected by the unfair competition from the supermarkets and this new Tesco Jersey is just another example.
“In the past, we would see a healthy increase in sales over the festive period, but now there’s barely any change to our general turnover. How are we supposed to compete when the likes of Tesco are advertising CDs that are cheaper than we can buy them off the distributors.”
The FPB has long been campaigning to scrap other VAT loopholes damaging small businesses including supermarkets that sell hot take away food without the tax.
Nick Goulding, FPB chief executive, said: “We cannot afford to underestimate the hugely damaging impact supermarkets, with their anti-competitive practices are having on the traditional high street. Sadly, across Britain, we are seeing more and more clone towns with big name chains dominating shopping centres.”
