Swinney under attack over revamped ‘son of Tesco tax’

They accused the finance secretary of simply repackaging under a different name the controversial £30 million levy on big retailers which was defeated by parliament earlier this year. Retailers also warned that the Scottish Government’s U-turn could endanger job creation and further investment in Scotland.

As part of his Budget statement yesterday, Swinney unveiled a “public health levy”, which will see supermarkets and other large vendors of alcohol and tobacco pay a supplement through their business rates. But the Scottish Retail Consortium (SRC) said the new levy was the same as the large retail tax, only “slightly repackaged with a different hat on”.

Although the full details of the penalty are yet to be revealed, the SRC fears that it could cost food retailers £500,000 over the next four years on top of their normal business rate bills.

The group believes the health label is bogus because if the government’s real purpose was to target alcohol and tobacco suppliers, then it would also have hit hotels, nightclubs and manufacturers.

“It’s not as if the only cigarettes that do harm are the ones that come from supermarkets,” SRC spokeswoman, Sarah Cordey, told The Scotsman.

“To target just the big retailers that have a really good record on responsible policies around alcohol and tobacco – it just doesn’t make sense.”

The SRC’s director, Ian Shearer, said: “This new tax is a blatant fund-raising exercise which is illogical and discriminatory.

“Supermarket margins are already cut to the bone as stores compete to offer the best deals to cash-strapped consumers.

“This tax would make it harder for food retailers to keep prices down for customers, and makes Scotland a less attractive place to do business, invest in and create jobs.”

Garry Clark, head of policy at the Scottish Chambers of Commerce, dubbed the levy “the son of Tesco tax” and questioned the direct health benefits. “Clearly, it’s a tax on business at a time when business can’t afford it,” he said.

Retailers said they had received only ten minutes warning before the controversial policy was announced to the Scottish Parliament and the government had once again failed to consult on the issue. Clark warned that if this was the case, then clearly “lessons have not been learnt” by ministers.

CBI Scotland’s director, Iain McMillan, warned: “The re-emergence of the retail levy was absent from the SNP manifesto and we consider its reappearance a fundamental breach of the commitment to poundage rate parity.”

He also questioned that if ministers could not be trusted over business rates, then “what would they do with powers over corporation tax were that to be devolved?”. Swinney had reassured MSPs in June that he had “no proposals to bring forward any new taxes in Scotland”.

There was also widespread condemnation for Swinney’s decision to reform the empty property rates relief from April 2013, which is likely to see it scrapped or significantly reduced. Property experts warned the policy would be an “own goal” as it would stifle speculative development and hit landlords hard at a time when the industry remains in the doldrums.

Doug Smith, Scottish chairman of commercial property consultancy CBRE, said it was “naive” of the finance secretary to assume that landlords were purposely keeping their vacant properties empty.

“The biggest problem in the market at the moment is a lack of demand [for properties] not a lack of supply,” he said.

“It will push back the point at which there is recovery in the market. Speculative development – even without this added burden – is rarely viable and if the government is looking for the construction industry to help Scotland build itself out of the economic difficulty, then this [policy] is quite short-sighted.”

David Melhuish, director of the Scottish Property Federation, said: “Supporters of removing the relief may think this provides an incentive for vacant shops to be brought back into use.

“If this was so, why have vacancy rates in England soared since the relief was removed south of the Border?”