John Swinney's £30m Tesco tax may be saved – by Labour

Published on Wednesday 19 January 2011 18:49

THE SNP's £30 million "Tesco tax" will be rejected in a report by MSPs today, putting further pressure on finance secretary John Swinney's efforts to pass the Scottish budget for next year.

• The finance committee will call on John Swinney to 'reconsider' his policy. Picture: Ian Georgeson

Holyrood's cross-party finance committee will call on Mr Swinney to "reconsider" his controversial policy, which aims to force big firms, including supermarkets and department stores, to pay tens of thousands of pounds extra a year in rates.

The rejection leaves ministers facing defeat in the full parliament on the tax when the budget for 2011-12 is considered over the coming weeks.

But last night it emerged the finance secretary's plans could yet be resurrected, after Labour sources said they had not yet ruled out backing a reworked rate rise, amid signs of pressure in the party's own ranks to support the SNP measure.

Senior Labour MSPs told The Scotsman that "in principle" they were not opposed to supporting a tax hike for big business.

Their response came after the SNP government claimed earlier this week that the tax rise could pay the salaries of 1,000 nurses, putting Labour MSPs under growing pressure to back it.

The finance committee report, to be published today, examines the 30 billion budget proposals set forward by Mr Swinney in December last year. It is understood that it will also support Mr Swinney's plans for a council tax freeze for next year, with SNP and Tory backing.

However, Labour, Lib Dem and Tory members on the committee all raised concerns about the "supermarket tax" and have urged the SNP Government to think again.

Their verdict comes after a concerted campaign by the business community, which continued yesterday when retailers met MSPs on the local government committee to lay out their opposition to the plans.

The retailers said it was unfair for them to be held responsible for sorting out the Scottish Government's budget shortfall.

Fiona Moriarty, director of the Scottish Retail Consortium - which represents the four big supermarkets - told MSPs: "It's not our job as a sector to come up with solutions for budgetary shortfalls. We're here to present the reasons why we feel that it is inappropriate to target this particular tax on our sector."

The levy, announced by Mr Swinney last year, would apply to all firms with a rateable value of more than 750,000.

Ministers claimed the levy was initially intended to target out-of-town stores.

But city centre departments stores and hotels are also in line to be hit by the tax, which increases their rates by an extra 15p on the pound.

Ministers yesterday received further backing for the tax from the Federation of Small Businesses in Scotland, which pointed out the decline in small independent shops over the past decade - down from 1,160 in 1998 to 400 in 2008.

SNP members of the local government committee also questioned whether the increased levy would genuinely cause any problems.

Bob Doris said: "I can't see House of Fraser pulling out of Glasgow because of this levy. I just don't see that as credible.

"I accept they don't want to pay more money, I understand businesses don't want to pay more taxes, but to suggest businesses wouldn't endure is quite frankly ridiculous."With the finance committee having opposed the move, Mr Swinney will have to decide now whether to rethink his proposals or face defeat at the full parliament. The SNP may also stand by its plans, aware that some Labour members are increasingly fearful of being branded on the side of big business.

A Labour spokesman said last night the party was opposed to the plans as they stood.

However, one senior Labour MSP said last night: "On the one hand, if the business community is to be the source of additional revenue, why have they singled out the supermarkets? But the position is: let's see what the evidence is. In spite of the grandstanding of the CBI, they haven't come up with one fact that says they would be in a bad position if this tax went ahead.

"In principle, taking money from big business is not something we consider unpopular."