8,000 new jobs 'at risk' from SNP's Tesco Tax

Published on Wednesday 12 January 2011 18:27

AS MANY as 8,000 jobs could be at risk if the SNP government imposes a controversial supermarket tax, the body representing Scottish retailers has warned.

The warning came as the head of one of the UK's biggest stores - Sainsbury's chief executive Justin King - threatened to abandon the supermarket's entire Scottish investment plans unless ministers shelve the tax hike.

Plans to open about 20 new stores by the big four supermarkets - Sainsbury's, Tesco, Asda and Morrisons - could be "slowed or halted" if the tax hike designed to raise 30 million is introduced, the Scottish Retail Consortium (SRC) has claimed.

Under the plans, large high-street shops and out-of-town shopping centres will pay up to 320,000 a year on top of their existing business rates.

The "supermarket levy" was a surprise announcement in the SNP's draft spending plans for 2011-12 and has sparked a storm of criticism.

Mr King warned his business will have to scrap plans for new stores due to open in Scotland in the next two years if the tax is imposed. He claimed it would put "a damper" on job creation.

The SRC warned of "terrible" consequences for investment in Scotland if the tax was imposed. Director Fiona Moriarty said that the plans by the big four supermarkets to open about 20 stores in Scotland during that time would be harmed by the tax, which will hit retail firms with a rateable value of more than 750,000.

Ms Moriarty said: "Preventing this unfair tax on successful businesses is at the top of the retail sector's agenda, and we aim to place it top of the government's agenda as well. It's a shame the Scottish Government seems so determined to continue on a path that risks jeopardising jobs growth and investment.

"It would be terrible to see that growth slowed or halted as a result of the Scottish Government enacting a policy which will make the country a less welcoming place to do business.

"Preventing this ill-conceived measure from going ahead will be crucial to Scotland's economic security in the months and years ahead."

Mr King said that the tax hike could force the supermarket chain to shelve plans for stores in Kelso, Nairn and Irvine and three planned extensions to existing premises in Linlithgow, Stirling and East Kilbride.

He said: "I cannot stand by those plans if the economics of opening those stores is materially changed.

"We have to prioritise where we spend our money, what delivers the best returns. We are not talking about a marginal tax here. It's massive. It will increase our tax bill in Scotland by 50 per cent if it goes through. Maybe the Scottish administration thought it would be a popular tax. I'm not sure a tax that creates a damper on the creation of jobs will be popular. That is not clever taxation."

Meanwhile, a Tesco spokesman said that the supermarket chain was "very concerned that this levy will make future investment much more difficult and will damage jobs at this crucial time for the economy".

He said: "We and others have urged the Scottish Government to think again."

A spokesman for Asda backed the call to abandon the tax and said that "any increase" in taxes on supermarkets "makes expansion more difficult."

Business rates are paid to local authorities and are expected to be set at 42.6p in the pound for all UK companies in the next tax year. But for any Scottish property valued at more than 2.1 million, the SNP would take a supplement of 15p in the pound under the new supermarket levy.

It is estimated that Tesco would pay an extra 9m year under the new tax, Asda 8.8m, Morrisons 4.4m, Sainsbury's 3.5m and B&Q an extra 2m.

Marks and Spencer would pay 1.3m more, while the tax would also apply to big names such as Ikea, John Lewis, Primark, Debenhams, Next and one store operated by Harvey Nichols.

Iain McMillan, director of CBI Scotland, welcomed the intervention of the Sainsbury's boss and said the tax sent an "appalling signal" to supermarkets looking to invest in Scotland.: "It's a very ill-advised policy and the Scottish Government should abandon it and start behaving like a government that wants to encourage business growth.

"The chief executive of Sainsbury's should be congratulated for having the courage to say this about a policy which sends an appalling signal to businesses by saying come to Scotland and pay more tax."

Finance secretary John Swinney said the bulk of the 30m the government hoped to raise from the tax would come from the "very largest supermarket stores".

He said: "The reality is that by raising an additional 30m in revenue from only the very largest retailers - or 0.1 per cent of business properties - we can provide more investment in economic recovery and local services, from which almost all businesses benefit."

Opposition parties have attacked the plan and say they will vote against the tax when the proposal comes before MSPs on 26 January.