Retailers gain 330m euros per year from shelf taxes

Major store chains in food retail last year posted revenues worth around 330m euros from the shelf taxes they impose on food suppliers alone, according to ZF calculations based on the first official information about these taxes.

A Competition Council report on food retail mentions for the first time the number and weight of these taxes in the total turnover domestic suppliers of foodstuff generate in store chains.

Major networks, now holding 40% of food retail, levy around 13 shelf taxes on suppliers, with the cumulated value of these taxes on average accounting for 7% in sales registered in these stores, according to Competition Council data.

Retailers have also released, for the first time, an estimate on this weight. “The average of these taxes in turnover generated by food suppliers in major store networks stood at 8% in 2008,” stated Adrian Manolache, general secretary of the Association of Major Retail Networks in Romania.

Considering the market is put at 6bn euros for last year, of which around 70% are food segment sales, the shelf taxes food suppliers paid to major retailers can be estimated at 336m euros.

Expansion taxes, luncheon voucher management taxes or taxes meant to cover risk of not selling the products will vanish from store chains’ vocabulary starting 2010, when retailers are to align their practices to the new trade law. However, nobody can stop retailers from “inventing” new taxes, warns the Competition Council.

In their turn, producers maintain the new rules are forcing retailers to avoid raising shelf taxes as such a move would place them at a competitive disadvantage against small sellers that levy no display taxes.

The new law requires retailers to include shelf taxes on a separate invoice at the moment they acquire products from suppliers.

The law, which came into effect a month ago, gives retailers time until mid-January 2010 to renegotiate their contracts with suppliers, so as to make them compliant with the new regulations.