They were told yesterday by a leading trade consortium that Finance Secretary John Swinney’s plans to raise £30 million through a 35% increase in business rates for big-name brands operating on the high street and out-of-town retail parks would also jeopardise future investment and cost jobs.
Scottish Retail Consortium (SRC) director Fiona Moriarty said the tax was “unfair, unjust and inequitable and targets one part of one sector that is one of the key sectors in terms of driving investment growth and opportunities across Scotland over the next few years”.
However, Colin Borland of the Federation of Small Businesses, said the tax would help “level the playing fields and make it easier for small businesses to compete”.
The pair clashed as Holyrood’s Local Government Committee examined the proposal revealed by Mr Swinney in his draft budget of a “business rate supplement” of up to 15p in the pound for any property valued at more that £750,000.
Ms Moriarty said the SRC would find the proposals “marginally more palatable” and would be less vocal in its opposition if the money was ring-fenced for city centre or town centre redevelopment.
She claimed policy was “confusing and misleading” because it had been presented as an out-of-town supermarket tax when the reality was it would impact on all types of retailers in all locations.
She predicted “a very serious outcome when there are large vacant units in our towns and city centres across Scotland because they are economically not viable to fill”.
However, Mr Borland said 74% of his members supported the levy and outlined the decline of small retailers. He said the number of greengrocers had dropped from 1160 in 1998 to 400 in 2008 while butchers had dropped from 1300 to 755 in the same period.
He said that if the levy made it less attractive to build large out-of-town retail stores, instead to encouraging businesses to invest in smaller town centre developments, “I don’t think that is the worst outcome for our town centres or the economy as a whole”.
According to the Scottish Government, it is estimated that 10 stores on Edinburgh’s Princes Street would suffer the impact of the retail levy.
Graham Bell, of Edinburgh Chamber of Commerce, said: “We have been opposed to this from the outset. We are incensed. Various suggestions have been made that it would somehow benefit re-investment in the cities are not borne out in practice at all. The money is just going into the pot. It’s not going to fund anything in city centres.”
Mr Bell said it would penalise Scottish cities more than smaller towns. “The fact of the matter is those firms that will be affected are multi-national corporations and they can invest where they want. So if they are not making enough money in Scotland they can invest in Korea.”
Others fear the additional tax could be increased under future administrations. Angus MacCuish, of FG Burnett, a property and building consultants and a board member at Aberdeen & Grampian Chamber of Commerce said: “We would query whether this is the thin edge of the wedge and would also question how much further this might be taken and where it might end.”
The SRC has the backing of some of the biggest names in retailing and property groups with city-centre interests including John Lewis, Boots, Debenhams and Glasgow City Marketing Bureau.
Ms Moriarty told The Herald: “Retailers are demonstrating their commitment to Scotland by opening more stores and employing a growing number of local people.
“It would be terrible to see that growth slowed or halted as a result of the Scottish Government enacting a policy which will make the country a less welcoming place to do business.”
However, yesterday the committee’s deputy convener, Glasgow SNP MSP Bob Doris, claimed there had been a “significant over-egging of the argument” by the big retailers. He claimed the big supermarkets would make the cash to pay the levy in a matter of hours.
He said: “I can’t see House of Fraser pulling out of Glasgow because of this levy. I just don’t see that as credible.”
However, Ms Moriarty told him: “It is important to distinguish between turnover and profit. This is also a tax on individual stores and it has to be looked at in terms of the impact on individual stores.
“There has been no impact assessment and no consultation about this tax and to focus on supermarkets. Unhelpful facts about turnover rather than profit I do not think bring any clarity at all.”
MSPs on the Local Government Committee will vote on a LibDem motion to annul the tax on Wednesday next week, just hours before Mr Swinney formally presents his budget to Parliament.
Taxing times:
Tesco to pay £9 million more, Asda £8.8m, Morrisons £4.4m, Sainsbury’s £3.5m, B&Q £2m and Marks and Spencer £1.3m.
The so-called supermarket tax will also hit city centre properties.
Large high street shops and out-of-town shopping centres will pay up to £320,000 extra.
Glasgow city centre: 17 stores would have to pay extra. John Lewis pays £2.1m now but that would rise by £237,000.
Edinburgh: Ten stores situated in Princes Street would be hit.
Dundee: One non-supermarket city centre retailer will be affected.
Aberdeen: Two stores in Union Street would have to pay more.
Inverness: Two properties would pay more.
Stirling: Four properties (three of which are large supermarkets) would be hit.
