‘Supermarkets are not loved, more tolerated as a necessary evil’
A SURE-FOOTED government is one to admire in these testing times. The Greek prime minister yesterday presented himself to the G20 international gathering in Cannes. German chancellor Angela Merkel and French president Nicolas Sarkozy no doubt gave him what some might describe as a verbal “doing” for calling a referendum and simultaneously plunging the eurozone and European stock markets back into crisis.
Whether we have political stability in the UK is a matter of political taste. But governments cannot afford to be on the wrong side of business, and therefore jobs, in this time of economic crisis. People are deeply worried about their personal financial security, so if an employer begins to ruminate that the political climate is agnostic towards business, that will feed through to the shop floor.
So it is puzzling that the Scottish Government has picked a big fight with the supermarkets. At one level it could make perfect political sense. Supermarkets are not greatly loved, more tolerated as a necessary evil as consumers seek to keep household expenditure in check against a background of thumping increases in heating bills.
So an explicit tax raid on the biggest out-of-town superstores which are making, in the Scottish Government’s eyes, “excessive” profits must have seemed a good idea. Oddly, it was not a good idea as recently as June, when ministers declared they had no plans to re-introduce such a punitive tax. But now they need the money.
First this tax hit was described as a health levy targeted on big businesses selling alcohol and tobacco. But it has nothing to do with health, as most cigarettes are sold by small retail outlets and they have not been touched as yet. The supermarkets do not believe that minimum pricing of alcohol will work. So, in opposing that strand of SNP policy they are not one of us. It is payback, or rather pay-up, time.
Similarly puzzling is the complete lack of a Business and Regulatory Impact Assessment. This is a tool used by government to judge what difference a new measure might have. One was used for the proposed labelling of newly built homes to show their “eco-friendliness”. It indicated that the proposal would cost businesses between £120 and £2,000. That is rather less than the £110 million estimated cost of the new business tax on supermarkets.
A lack of proper scrutiny and no financial assessment are intended to reduce any public pressure on ministers promoting this new tax. Public pressure is a factor the Scottish Government just can’t abide.
So a storm is brewing because all this looks anti-business and creates a negative investment climate in Scotland as a tax that did not rate a mention in the SNP manifesto and has not been subject to any consultation is now rushed through parliament with the minimum of scrutiny.
But here is a prediction: a way out will be found to sweeten the pill. September’s RPI rate, a measure of inflation, was 5.6 per cent. The business rate poundage, part of the way the business rates bill is worked out, is set on a UK-wide basis by this figure. UK Treasury ministers invariably go with the September number and Scottish ministers can agree or differ.
I would lay a goodly proportion of the new SNP business tax income that for 2012-13 the rate poundage will be set at a lower level north of the Border.
The Scottish Government can then claim to have helped Scots businesses against those evil money-grabbing tyrants in London and create a competitive advantage, which is of course exactly what they would do if Scotland were independent. Whether Scottish firms will buy that after the imposition of the new SNP business tax is a good question.
• Tavish Scott is Liberal Democrat MSP for Shetland