Supermarket tax branded thin end of the wedge by business leaders

Published on Thursday 6 October 2011 00:09

A CONTROVERSIAL £110  million health levy on supermarkets and other big retailers has “opened the door” to further tax hikes on smaller firms, business leaders have warned.

The proposal could jeopardise future investment in Scotland with large firms poised to move elsewhere in the UK with lower rates, MSPs were told.

The Scottish Government is to charge a “public health levy” on larger retailers with a rateable value of more than £300,000 that sell both alcohol and tobacco. Ian Shearer, the interim director of Scottish Retail Consortium (SRC), branded the measure “punitive” as he gave evidence to Holyrood’s economy committee on the recent Scottish Budget.

“The new tax has caused anger among the companies affected but also serious concerns among a wider range of business organisations who see the core principles of equity, continuity, financial certainty and evidence based policy making as being at stake,” he said.

Mr Shearer branded it “astonishing” that the policy has not been in the SNP’s recent manifesto, adding that John Swinney had ruled it out in parliament a few months ago.

“What message does it send to senior people in world class companies that the finance secretary can say this and do the opposite?” he added. There is no evidence that it is a health measure “other than in name”, he told MSPs.

“It is an illogical, discriminatory revenue-raising exercise aimed at a few companies who are able to afford it,” he said.

David Lonsdale, assistant director of CBI Scotland, said it was “naive” not to accept that the health lobby would try to expand the threshold more widely.

He said: “The Scottish Government has opened the door with this new tax on larger retailers.

“Given the reason for this is to tackle alcohol and tobacco, I think it’s short-sighted and naive to suggest that that threshold which has been proposed, in the region of £300,000 of rateable value, won’t be lowered in due course to smaller retailers.

“The health lobby will be very keen to see that threshold lowered, in terms of rateable values, so more shops, more retailers, are caught up in that agenda.”

The Scottish Government had initially tried to introduce the tax in the last parliament, but it was voted down by MSPs.

A submission from the CBI Scotland adds: “We are deeply concerned that this new levy will make it more expensive to invest in Scotland and could put at risk much needed investment from the retail sector, as larger retailers often have a choice of locations elsewhere in the UK or indeed abroad.”

The CBI welcomed much of Mr Swinney’s budget and spending review, but did find fault with a proposed tax on empty commercial premises.

Colin Borland, of the Federation of Small Businesses in Scotland, welcomed the finance secretary’s plan to continue the small business bonus, which he described as a “lifeline” for businesses. On the public health levy, he said his members would have preferred the cash raised to be invested in town-centre regeneration.

Mr Borland added: “Business rates are a difficult burden for smaller retailers and any moves to level that playing field are to be welcomed.”