Supermarket tax – hitting the poorest or supporting local communities?

WHERE you stand on the idea of a “Tesco tax” – the tabloid alliterative nickname for a proposed tax on large retail outlets – probably depends on what size community you live in, and whether you value and use locally owned or independent shops.

If you live in a small or medium-sized market town which has seen the life literally sucked out of the high street by superstores and retail warehouses on edge-of-town business estates or out-of-town campuses, you probably applaud the bid by Derby City Council, supported by 19 other councils, for the introduction of a levy of up to 8.5 per cent on large supermarkets, with the revenue to be reinvested in the local community.

If you live in a large city, you probably don’t care, because you have plenty of choice to shop where you like, looking for the best deals or the store that is nearest to your home or office. And the impact of one more Tesco or ASDA or Sainsbury or Lidl or Waitrose on an urban area that already has three or four large supermarkets is unlikely to cause you any lost sleep.

But if your town has a thriving high street with a selection of shops meeting basic needs and special interests and two medium sized supermarkets, catering for everyday requirements for those who have to watch their spending and appreciate special offers, you will probably understand the impact that an out-of-town superstore could have.

It takes a remarkable community, with energetic leadership, a dynamic campaign in the local and national press and social media (and a measure of luck), to defeat a supermarket giant that is determined to open a new store and has the money and the manipulative media skills to get its way.

So the so-called Tesco tax offers the prospect of some compensation for towns that fear the retail destruction that usually follows a major supermarket development. Supporters of Derby’s bid come from across the political spectrum and include Weymouth and Portland Borough Council, the Cornwall Unitary Authority, South Hams District Council in Devon, Oxford City Council and Southwark Borough Council. Organisations that support the proposal include the Public and Commercial Services Union, the National Federation of Sub-Postmasters, UNISON, Sustainable Food Cities, the Campaign for Better Transport and Action for Market Towns.

Derby City Council says that 95 per cent of the cash spent in large supermarkets leaves local economies, compared with 50 per cent for smaller local retailers. Under the proposal, large retail outlets with a rateable value of more than £500,000 would have to pay an extra business levy of up to 8.5%. The council estimates that the levy would generate £2m a year for local authorities.

The proposal is based on the provisions of the Sustainable Communities Act, which allows communities and councils to suggest solutions to local problems. Similar schemes already exist in Northern Ireland and Scotland.

If the government agrees to Derby’s proposal, it would apply to all local authorities, not just those that have backed the idea. But the Department for Communities and Local Government (DCLG) was reported to have told the BBC that the idea had already been ruled out in a past round of proposals under the Sustainable Communities Act.

Government and business spokesmen and the financial and business media have predictably lined up against the proposal, claiming that it is anti-business, that food prices would be forced up as a result and that it would hit low-income families.

A government spokesman said that there were better ways to support small shops.

The government has six months to respond but its answer already appears to be clear. However, if it did agree, the levy would apply not only to the 20 councils but to all local authorities in England. It could cost the four big supermarkets an extra £190m in tax and if it applied to other out-of-town retail superstores such as Ikea or B&Q, that figure would rise to about £400m. That money would help to support a wide range of essential services from health and education to economic regeneration.

The British Retail Consortium is consulting its members on the proposed tax but it wants reform of the whole business rates system which it says is “no longer fit for purpose.”

With government and industry heavyweights lined up against Derby and its supporters, it would be easy to think the levy idea is dead in the water – but nobody thought that a small Dorset town could defeat a supermarket giant. The big boys may shout loudest but they do not always have the last laugh.


Fanny Charles