Retail concern

No reports published on impact of ‘grocer tax’

Tom Arthur
Tom Arthur: no reports

The Scottish Government has been accused of using a public health tax on grocers as a “tax grab” after a minister admitted that no reports were published on the impact of the levy.

Ministers are looking to re-introduce the public health supplement which was in place between 2012 and 2015 as part of proposals to tackle alcohol mis-use.

Retailers selling alcohol and tobacco from premises with a rateable value of more than £300,000 were forced to pay £95 million on top of their rate bills.

SNP backbencher Fergus Ewing asked in a parliamentary question whether the government has published any reports or analysis on the effectiveness of the surtax.

Finance minister Tom Arthur replied that the Scottish Government “has not published any reports in relation to the previous Public Health Supplement which was in place from 2012 to 2015.” 

Retailers claim that the absence of any reports on its effectiveness shows it was nothing more than a “tax grab”.

David Lonsdale, director of the Scottish Retail Consortium, said: “It’s two months since Ministers revealed in the Scottish Budget they are considering re-introducing a business rate surtax on grocery stores.

Alcohol sale in supermarket
Stores selling alcohol face a new tax

“Yet we still have little clue as to the scope of any potential new rates levy, who exactly it might apply to, how it might work, how much affected stores would be expected to stump up, whether it would come on top of the higher property rate, whether it would be a slab tax, how long it would apply for, nor why retail has been singled out.

“All we know for certain is that Ministers have said they are considering it because they need to plug a gap in devolved government finances.

“This is alarming. If the state of the devolved public finances turns out to be worse than feared then presumably it opens the door to a widening of the scope of the surtax to capture smaller retailers, or other economic sectors out-with retail being similarly targeted. The sooner Ministers shelve this surtax the better.”

Grocers have already been hit with tens of millions of pounds in costs for the failed deposit return scheme and are set to be challenged with new devolved regulatory measures including proposed in-store curbs on the selling of products high in saturated fat, salt, and sugar.

Shona Robison in finance committee 20 Feb 2024
Shona Robison: no decision on health tax

The public health surtax was raised during a meeting of the Finance and Public Administration Committee when Tory MSP Liz Smith asked Finance Secretary Shona Robison: “How much have you modelled the impact of the surtax?” She asked if the tax was about funding public health or plugging a gap in the government’s budget.

Ms Robison replied: “We want to look at any evidence of impact and we will continue to have a dialogue We will look at this in the round before making a decision.”

She insisted that nothing had been decided and talks with business groups would continue. She said “the gap [in the budget] is due in part to decisions made by the UK government.”

A Scottish Government spokesperson said: “The announcement in the Scottish Budget 2024-25 signalled the Scottish Government’s intention to explore the reintroduction of a Public Health Supplement in advance of the next Scottish Budget.

“Exploratory discussions with business organisations have already started and will continue alongside engagement with other relevant stakeholders such as public health organisations.”

During the committee hearing Ms Smith asked Ms Robison to name one business person who had welcomed the government’s income tax increases and why more help was not forthcoming for the hospitality sector.

The Finance Secretary said she faced a choice between providing resources to public services and cutting business taxes. She said she had met hospitality sector representatives.

“Those I met understood we had made a decision to invest in public services. They may not have agreed with it but they understood,” she said.

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