Tesco faces £38m bill for selling tobacco

SUPERMARKET giant Tesco is set to be hit the hardest by the Scottish Government’s proposed “son of Tesco tax”, property experts have warned, adding that the levy proposed by finance minister John Swinney could drive some supermarkets to pull tobacco from their shelves in Scotland.

According to analysis by property firm Ryden, Tesco has 90 out of the 221 stores in Scotland that are set to be affected by the government’s public health levy. The government intends to raise £110 million over the next three years, with £38m due to come from Tesco alone as it has the highest number of stores with a rateable value of £300,000 or more. The levy is aimed at big retailers that sell both alcohol and tobacco, with Morrisons, Asda, and Sainsbury’s also set to cough up tens of millions each in additional business rates over the next three years.

In the first year of the new levy, Tesco will see £10m added to its rates bill payable in April. Overall, supermarkets selling both cigarettes and booze face a 22 per cent increase in their rates bill, an average increase of £136,000 payable in 2012, with subsequent rate bills rising by £181,000 in 2013 and 2014.

Tim Bunker, a ratings specialist and partner of Ryden, said the legislation was “not terribly well thought through” as retailers could escape the levy if they discontinue sales of tobacco in their large shops.

He said: “Tesco will work out they don’t make £10m in profit on cigarettes. So they could easily clear their shelves and save themselves £10m in one fell swoop.”

The Scottish Retail Consortium said the figures proved that the government was “picking the pockets” of the big four supermarket groups and that its claims it was using the levy to improve public health were “spurious”.