CBI warns 'supermarket tax' will jeopardise city centre improvements

THE Scottish Government's proposed "supermarket tax" will jeopardise hundreds of thousands of pounds spent by major retailers to improve city centres, business leaders have warned.

Proposals to charge supermarkets and other major retailers in Scotland an extra 30 million through rates rises may see them withdraw support for so-called business improvement districts (Bids).

The government-sponsored programme, which raises a levy from participating retailers, has seen ten Bids established north of the Border, operating from Edinburgh to Elgin with further Bids planned for Aberdeen, Peebles and Oban.

Ken McCormack, head of business rates at surveying firm James Barr, said: "The major retailers affected by this increase will not support any Bids in the future because that will mean a further increase in their rates liability.

"If a Bid goes through and they have to pay an extra 2p or 3p in the pound then that will affect their bottom line yet again. I would think the government or the council trying to implement that would receive very little support from the retailers affected by this."

David Lonsdale, assistant director of CBI Scotland, said Bids were an effective way of improving city centre environments but they were in danger of losing important support from major retailers.

He said: "The hefty new rates surcharge to be levied on larger retailers could well diminish their appetite to support future proposals to establish Bids, or indeed support the renewal of existing Bids once their term expires.

"The Scottish Government contributes taxpayer money to encourage the development of Bids, yet this rates surcharge may have the perverse effect of undermining it."

Ian Davison Porter, the executive director of Bids Scotland which oversees the organisations, said he does not think that big businesses will pull out of Bids, but acknowledges that support from major retailers is essential.

He said the Bids most likely to be affected by any withdrawal of support were larger cities that have a significant presence of national retailers, such as Aberdeen - which has yet to vote on its Bid - and Edinburgh, which is set to face another vote to extend its term in 2013.

"It may affect Edinburgh in terms of large retailers and Aberdeen when it comes to the ballot. Bids are about democracy," said Davison Porter.

A Scottish Government spokesman said: "The proposed levy for the retail sector will apply to only 0.1 per cent of business premises - the very largest - and will help redress some of the imbalance between profitable large supermarkets and smaller independent retailers."

Davison Porter said he supported government plans for the levy. "We have to put the rates rise into perspective. We are talking about the government raising 30m out of a total non-domestic rate collection of more than 2bn."