Primark faces £150k tram tax

City council transport officials have ordered that planners demand payment of the huge bill - or the whole development will be blocked. The move comes despite some other developments in the city centre getting a discount on their "tram tax" payment - or even being allowed to pay nothing - to ensure they can afford the scheme.

It is the latest hefty bill that council officials have demanded from the budget retailer - after they charged 290,000 for "air rights" because part of its building cuts through air space owned by the local authority.

It is not yet known whether Primark owner Associated British Foods will be willing to accept the demands or will fight for the fee to be waived when its plans are debated by councillors next week.

But councillors said today that the city must demand that developers do pay the full contribution they should towards the tram.

Councillor Ricky Henderson, finance spokesman for the Labour group on the council, said: "If a retailer is coming onto Princes Street, the chances are the tram will serve Princes Street and they will benefit from it.

"I can understand developers of a new hotel on Leith Walk questioning their contribution because there's doubt about when the tram will go down Leith Walk.

"The policy on tram contributions was set some time ago. Unless there is a question over the future of the tram project, it is appropriate that the policy remains in place."

Council chiefs have recently backed down over a number of huge "tram tax" demands after developers said they couldn't afford to pay.

Forth Ports was due to pay a 29 million contribution "up front" ahead of starting its plans for nine urban villages around Leith Docks. But the company managed to persuade the council to accept 3.2m for the first two villages when the tram project is completed. It will get back round the table to determine the contribution for the rest of the masterplan when it submits more detailed plans.

Irish developer Deramore was facing a 500,000 contribution when it proposed a new Premier Inn and New Look for Princes Street. But the demand was withdrawn when it threatened to pull the plug if it had to pay. And developer Fraser Hamilton was given a 250,000 discount for its hotel on Leith Walk after it said it couldn't afford the 917,947 demanded.

In his report for a planning committee meeting, John Bury, the council's head of planning, recommended the scheme is granted if Primark agrees to the tram contribution. He said: "In line with the tram guidelines, transport has requested a contribution towards the tram of 158,240, based on the additional floor area and potential impact on transport infratructure."

Primark has been linked with a move onto Princes Street since 2006. In 2008 it bought the former Marks & Spencer store at number 91-93.

It initially hoped to open by Christmas 2008 but it then decided to make the store a flagship branch and took more time drawing up plans. It recently said it now plans to open in August 2011.

Councillors will make a final decision on Wednesday. A spokesman for Primark did not want to comment.