Finance secretary John Swinney yesterday reopened his war on supermarkets, announcing a £100million tax raid on major retailers.
Large shops selling tobacco and alcohol will be hit with a new levy from next April under the Scottish Government’s three-year spending plans.
The SNP Finance Secretary’s move comes after he was forced to ditch wider “Tesco tax” plans for out-of-town retailers in the face of vociferous opposition during the last parliament.
Described as a “public health levy”, the new tax will target supermarkets to the tune of up to £40million a year through a business rates supplement, boosting the coffers of Scotland’s cash-strapped local authorities.
Business leaders reacted with anger to the proposals, dubbed “Tesco tax mark II”, warning they would lead to higher prices for food and other goods as shops looked to cover costs. Ian Shearer, director of the Scottish Retail Consortium, said: “This new tax is a blatant fund-raising exercise which is illogical and discriminatory.
“Supermarket margins are already cut to the bone as stores compete to offer the best deals to cash-strapped consumers. This tax would make it harder for food retailers to keep prices down for customers, and makes Scotland a less attractive place to do business, invest and create jobs.”
CBI Scotland director Iain McMillan said: “The re-emergence of the retail levy was absent from the SNP manifesto.”
Mr Swinney confirmed a five-year freeze in council tax and said public sector pay would be frozen for another year.
He also warned that pension employee contributions will have to be raised for teachers, NHS, police and fire schemes unless the UK Government changes its own plan for increases.
The plans included a boost to Government-backed capital investment, intended to support economic recovery. More than £750million will be transferred from resource expenditure into capital projects such as housing and transport.
Mr Swinney yesterday again heaped blame on the UK Government after it slashed the devolved administration’s budget by £1.3billion to £27.95billion next year. He told MSPs: “This spending review contains tough choices because of the cuts from Westminster that go too far, too fast.”
The supermarket tax, which is expected to raise £110million over three years, would contribute, said Mr Swinney, to “preventative spending measures” designed to tackle the “health and social problems associated with alcohol and tobacco”.
Despite the criticism from larger retailers, the levy was welcomed by Andy Willox, of the Federation of Small Businesses.
He said: “Moves to make large out-of-town retailers pay a more proportionate level of rates will be welcomed by many of our members but we would urge that a good proportion of the money raised should be used to turn around our local communities.”
Mr Swinney described “tough choices” needed to balance the books, calling for further savings in public services. The pay freeze for the coming year is expected to be the last before “modest increases” in future years, he said. Any employee earning less than £21,000 will continue to receive at least a £250 rise in their salary.
Labour’s finance spokesman, Richard Baker, accused the SNP of passing on the pain to councils. He said: “There has been no rabbit out of the hat and there is a great deal of pain for key parts of our economy and many people in our society in this budget.”
Tory Gavin Brown accused the SNP of not putting the economy at the heart of its budget. He said: “They have said the economy is the most important thing but the rhetoric and the reality do not match .”
Mike Kirby, of Unison, said: “Although his announcement removes the threat of industrial action in local government, we still have serious issues with many thousands of our members still facing unprecedented attacks to their pensions.”
Lynn Henderson, of the Public and Commercial Services (PCS) union, said: “Members in Scottish Government will be taking strike action on November 30 with millions of other public sector workers on pensions, but the extension of the pay freeze by our own Government will provoke anger as never seen before.”
Grahame Smith, general secretary of the STUC, said: “ Having criticised the UK Government for combining a pay freeze with a pension contributions cash-grab, Mr Swinney has proceeded to take the same path in Scotland.”