English councils propose 'Tesco tax' on large supermarkets

According to the BBC, Derby City Council has called for the right to bring in a levy in a “modest” effort to help spending in supermarkets “recirculate” in local communities.

A further 19 local authorities in England have backed a ‘Tesco tax’ on big retailers, which could raise up to £400m a year. The extra business rates levy would hit any large store with a rateable value of more than £500,000.

A similar tax already operates in Northern Ireland and Scotland.

However, supermarkets have insisted any further taxes on their stores would push up prices for the consumer and threaten their ability to invest in jobs and growth.

Derby City Council suggested the idea via the Sustainable Communities Act, which allows communities and councils to make suggestions to Government to solve local problems.

“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 recirculates within and continues to contribute to local jobs and local trade,” Derby City Council’s report states.

The Government has six months to respond. If it passes the law, the levy would apply to all local authorities in England.  

However, the Department for Communities and Local Government said any levy would hit low-income families the hardest. “There are much better ways to support small shops,” it said.

High street campaigner and Labour adviser Bill Grimsey “cautiously” welcomed the move.

“I support a one-off levy to help develop long-term plans for our town centres and high streets so they have the best possible chance of survival,” said Grimsey. “But I don’t want to see this introduced as an annual levy that essentially becomes just another tax. If it’s used simply to plug council budget shortfalls it won’t be fair and it’ll be anti-business. This has to be about the high street not clobbering big business.”

But business rates specialist CVS regional director David Ford said: “Once again business rates are being suggested as an ad hoc solution without due consideration of the wider implications and complex nature of this tax.

“Supermarkets are understandably protesting this proposal – business rates are already a burdensome overhead and introducing additional fixed costs would put further pressure on a squeezed retail sector.

“There’s certainly a debate to be had about business rates reform and how the tax liability should be distributed, but this needs a systematic, sensible and joined-up approach to find a solution which works for business.”