Retailers could be facing new tax costs from local authorities who use powers they are set to gain under the Business Rates Supplements Bill which was announced after the Queen’s Speech today.

The Business Rate Supplements Bill would allow local authorities to raise revenues directly from businesses in their areas to fund local economic development projects.

The bill will allow authorities to introduce a supplement of 2p per£1 of rateable value to businesses with rateable value over£50,000.

This could add an extra£160 million a year to retailers' tax bill, according to the British Retail Consortium.

The BRC has urged the Government to ensure that safeguards are put in place so that local authorities will only use extra taxes to pay for genuinely business-boosting projects and not just for general expenditure.

BRC director-general Stephen Robertson said: “At a time when retailers are being hit by rising costs and falling sales the bill gives local authorities the power to clobber businesses with a hefty new stealth tax.”

Retailers have also criticised the bill.

Boots UK managing director Alex Gourlay said: “This is the wrong tax at the wrong time. It will simply lead to increased costs for retailers at a time when the sector’s margins are already being squeezed by a wide range of additional property costs and trading conditions are challenging for the sector.”

Tesco’s corporate and legal affairs director Lucy Neville-Rolfe added: “Businesses that are property-dependent, including retail, are facing into the worst recession for many years. It is very unfair that rates for next year will increase by 5 per cent as they are based on September 2008 figures when inflation was very high."

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