Subscriber login Close [x]
remember me
You are not logged in.

New "Tesco tax" to raise money for small businesses could be counter productive warns ACS

Published:  28 July, 2014

Moves by local councils to introduce a so-called "Tesco tax" on major supermarkets to raise money to be re-invested in high street areas could set a dangerous precedent warns the Association of Convenience Stores.

 

Moves by local councils to introduce a so-called "Tesco tax" on major supermarkets to raise money to be re-invested in high street areas could set a dangerous precedent warns the Association of Convenience Stores.

Under the proposal up to 20 councils across the country want to use new powers laid down in the 2007 Sustainable Communities Act which allows them to submit requests for changes in national legislation or taxation measures. A similar move was rejected by the government in 2013.

If approved the councils said they would use the extra revenues, which could top £400 million, to help small businesses by introducing an extra business revenue of up to 8.5% on any retailer with a rateable value of more than £500,000. But the ACS is not convinced such a development would be good news for the high street.

James Lowman, chief executive of the ACS, said: "We are pleased that the councils are thinking about ways to direct more investment into the high street and help small businesses, but it would set a dangerous precedent if councils were able to add to business rates bills.

"This levy could apply equally to large retail stores in existing centres as well as out of town stores, which would not help high streets. There is also no clarity on how councils would reinvest any money raised, and the levy could become just general revenue-raising.

"We would prefer councils to show their commitment to the high street through greater commitment to town centre first rules in planning. Over the past two years, three-quarters of new retail space given planning approval has been for stores located out of town. Councils must do more to reverse this trend."

He added: "We continue to promote ways to make it cheaper to invest and operate stores in existing town, neighbourhood and village centres, especially through reform to the business rates system."

The idea of a supermarket tax was first raised by Derby local council and backed by 19 others.  But in rejecting the initial idea last year, government ministers feared the additional tax could result in higher prices. But a similar tax already operates in Northern Ireland and Scotland.

Derby council, in a report, stated:  "Research has shown that 95% of all the money spent in any large supermarket leaves the local economy for good, compared to just 50% from local independent retailers; this levy is a modest attempt to ensure more of that money re-circulates within and continues to contribute to local jobs and local trade."

Keywords: