Twenty councils from around the UK have backed a proposal to introduce a “Tesco Tax”. Led by Derby city council, the local authorities have called on the government to impose a tax on large retailers which would see businesses such as Tesco, Sainsbury’s and B&Q forced to pay an additional levy to local authorities.
Although the exact sum of the additional payment per annum was not specified in the proposal, leaders at Derby city council suggested a fee of up to 8.5 per cent of a property’s rateable value would be appropriate.
However, the suggestion has been dismissed by the secretary of state for communities and local government, Eric Pickles, who claims it is nothing but a “lazy” solution to the problems currently facing the high street.
He also points out that changing shopping habits have seen large supermarkets facing some of their toughest challenges in the past decades – epitomised by Tesco’s recent financial difficulties and the falling market share of the Big Four.
In an open letter to Derby city council, Mr Pickles said; “Larger premises already pay higher business rates, as a business rate bill is directly related to the rateable value of the premises: moreover, larger firms are not eligible for many of the various reliefs and also pay a higher multiplier.
“Supermarkets should certainly act with social responsibility, but equally, we should also recognise they play an important role in our society and free market in providing convenient, accessible and competitively priced food.
“Certainly high streets face challenges, but this is as much about the way that the internet is changing the way we shop in the 21st century – in that context, your proposal is sadly an all-too predictable siren call from some parts of local government: namely, the solution to every policy issue seems to be how to impose new taxes.”
In theory, the tax would mean that large retail businesses would be contributing more to the communities they operate in. However, with the business rates issue already highly contentious within the retail industry, introducing yet another level of tax based on rateable value would surely only encourage larger retailers to dampen down growth, thus weakening the country’s economy and creating fewer jobs per annum.
Business rates expert Paul Turner Mitchell agrees with Mr Pickles, saying; “This proposal, I have no doubt, would have been used simply to plug council budget shortfalls.
“It was anti-business; Eric Pickles was right to say it was lazy thinking.”
Previous Post
Assura tightens hold on Healthcare Sector
