Government in food-tax retreat

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CONTROVERSIAL plans to impose a pounds 90 a year "tax" on every food shop and restaurant in the country have been dropped by the Government.

The levy, to help to fund the new pounds 100m Food Standards Agency, will be retained in some form but will not be as high as originally proposed.

A system is being devised that is likely to place the main burden of the charge on supermarkets rather than small shopkeepers. The decision represents a U-turn by the Government.

Details of the scheme and its charges will be revealed when the Food Standards Agency Bill is published today by the Ministry of Agriculture, Fisheries and Food.

The agency is seen by ministers as one of the Government's top priorities and aims to restore public confidence in food safety after the BSE and E.coli crises.

Plans to impose a flat-rate levy on all businesses involved with the sale of hot or cold food had triggered outrage among small shopkeepers. With the backing of the Tories and some Labour MPs, the charge was dubbed a "food poll tax" by retailers as it would be levied on supermarket giants and village shopkeepers at the same level.

The Independent revealed last year that Tony Blair had approved plans to propose the pounds 90 levy as part of a move to push through legislation as quickly as possible. The Prime Minister ordered ministers to get it on to the statute book by the autumn - a determination that was underlined yesterday when it emerged that there will be a second reading of the Bill on 22 June.

Ministers believed that the levy was "reasonable" as it would cost less than pounds 2 a week, but the controversy caused by the proposal to impose the same charge on all 600,000 outlets selling food has persuaded them to change their minds.

Government hopes for a speedy passage of the Bill were dismissed last night by Peter Luff, the Tory chairman of the Agriculture Select Committee, who said his party would oppose any levy whatever its size.