Supermarkets warn against Scots 'Tesco Tax'

James Thompson
Monday 31 January 2011 01:00

Retailers have warned of the "extremely serious" consequences of fewer jobs and store openings in Scotland if the Members of the Scottish Parliament (MSPs) this week vote to introduce a punitive tax increase for large retailers.

The Scottish government in November unveiled the Large Retailer Levy, a rates supplement that will be added to all stores with a rateable value of more than £750,000 from 1 April, in an effort to raise additional funds. The Scottish Retail Consortium has estimated that the levy would increase business rates bills by 30 per cent for individual stores.

The proposal has incensed thebig supermarkets – which wouldbe the most affected – as they feel the tax would punish one of the few sectors that is creating new jobs in Scotland at a time of grave concerns over high levels of unemployment. Justin King, the chief executive of Sainsbury's, has already warned that the grocer could rethink its store opening plans in the country if the levy comes into force.

However, the hopes of some of the UK's biggest retailers were raised last week when Holyrood's local government committee rejected the so-called "Tesco tax", largely over fears it would make Scotland a less competitive place to do business. This week, MSPs will vote on the levy, which would raise an extra £30m, as part of other proposals for its one-year budget.

Fiona Moriarty, the Scottish Retail Consortium's director, said MSPs should follow the lead of the Parliament's Local Government and Communities Committee and vote down the planned levy this week. She said: "The consequences of this tax for Scotland are extremely serious. There'll be fewer large retail stores opening in the future and fewer existing stores will be expanded."

A Sainsbury's spokeswoman said: "We're pleased the committee has voted against this tax, which would have penalised the retail industry."

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