Tavish Scott: Supermarket power forces tax U-turn

WHEN is a tax not a tax? Answer: when a government quietly ditches it in the face of sustained hostility. The public health supplement, a tax few will have been aware of, has been placed in the out tray of the Scottish Government.

Tavish Scott. Picture: Neil Hanna
Tavish Scott. Picture: Neil Hanna

The entire policy was a farce. The tax was aimed at supermarkets. Most governments believe supermarkets are a necessary evil in life. Governments target profits using corporation tax. In Scotland, the Nationalists decided to introduce a public health supplement aimed at tackling the social cost of tobacco or alcohol in addition to the existing tax burden.

There would be a case for such a tax on two grounds. The first is that a tax should apply to any outlet for these products to meet the public health objectives. Second, the money raised should be spent on measures that tackle alcohol abuse and the devastating impact of tobacco. Neither condition was met by the SNP.

Sign up to our Opinion newsletter

Only one in five cigarettes sold in Scotland was covered by this tax. One-fifth of alcohol sales was similarly not touched. The £95 million raised in 2012 was given to local councils. But they could, and did, spend the money on their own priorities. There was no central government sanction against this income being spent on local roads and, therefore, no link between the tax income and spend on measures to tackle alcohol and tobacco use.

There are two wider points. The supermarkets were not happy and cut up rough. The SNP was told publicly that if Scotland votes for independence, then there would be no UK-wide supermarket pricing. The implication was clear: supermarkets headquartered south of the Border might levy higher prices for goods in what would be the foreign country of Scotland.

This week a social attitudes survey was all about the cost of living. If voters think an independent Scotland will make the take-home pay packet larger, then they are more likely to vote Yes. The converse applies. So the price of cornflakes, milk and tea really matter. They are features of daily life and price is a factor that every voter takes into account. The Yes campaign could not have supermarkets threatening such cost-of-living increases. The policy was therefore ditched because of the potential damage to the main objective of the SNP – independence.

The SNP has made much of a business-friendly tax regime. This was undermined by a policy described as unprecedented and iniquitous by retail groups.

Business has been criticised for not stating its position on independence. This is an example of a more sophisticated and practical way to achieve a change of government policy. Threaten the Nationalists’ main reason for existing – and do it publicly, with facts and in a sustained way. The results are clear: a U turn with the minimum of fuss.

There is a lesson there for every organisation across Scotland.

• Tavish Scott is Liberal Democrat MSP for Shetland