John McTernan: The supermarket levy is a tax on success

IT MUST have all seemed so simple. Hold down the council tax for voters in an election year by taking money from people who can't vote. Better still, make it big business and hope that you can demonise them so that you bask in some extra public support.

Thus the thinking in St Andrew's House about the supermarket levy. Originally paraded as a tax on out-of- town shopping centres, it turns out to be a tax on success. The levy applies to retailers with rateable values of over 2.1 million a year. Who are they? The big companies. Why are they big? Because the public like shopping there – voting with their feet, and, most transparent of all, their cash.

The undignified scramble that saw John Swinney first decline and then accept an invitation from the Scottish Retail Consortium shows that he realises this has become serious. Like many a policy car-crash, this has many facets, and many consequences.

The most obvious point is that Swinney has broken the first law of taxation – keep it invisible as far as possible. "The art of taxation consists in so plucking the goose as to get the most feathers with the least hissing" was how Louis XIV's finance minister put it.

Worse, Swinney made the assumption that in a fight he would automatically win because of the power of government. Turns out that the brands of the big-four retailers – Asda, Morrison's, Sainsbury's and Tesco – are seen by voters as more trustworthy than politicians even when they are Her Majesty's Scottish ministers.

The reason for retailers' anger is obvious when you do the numbers. The big retailers operate in the most competitive market in the country, arguably in Europe. They are a 5 per cent business. If they have a tax hike of 24m, they have to generate an extra 0.5 billion of sales.

How likely is that in a year when living standards are being squeezed, particularly by the VAT increase? As politicians, Swinney and Alex Salmond are genuinely pro-business, they don't subscribe to the hard left view that profits can be expropriated without consequences. They can't feel comfortable to be framed in such an anti-business posture.

What are the big retailers going to do? They have few choices. They could reduce some of the investment they put into social causes. That, though, is unlikely. These companies are good social partners with strong community links which they want to maintain. I suspect, though, that SNP ministers may find invitations to launches drying up.

There's really only one logical route – the customer will pay. But what do supermarkets sell in such high and consistent volumes that they could easily guarantee an extra half a billion pounds turnover? Petrol. I reckon a penny or two on a litre would do it.

But what was the First Minister pledging at the weekend? 10p off petrol. The words say one thing, the actions another. Does the left hand know what the right hand is doing?