Thursday, 3 February 2011

"Tesco Tax not past its sell-by date yet"

Published in the Scotsman, 2/2/2011. Click here to view.

As the Scottish Budget deadline approaches, the proposal for the so-called "Tesco Tax" should remain in the parliament's shopping basket. Alongside a range of other taxes, the economically nutritious value of this levy on retailers grossing more than £3 million-£4m annually should be more carefully considered. It is not past its sell-by date yet, but it needs quick action to ensure that it doesn't rot on the political vine.

OK, the original attempts at selling this new product line made it appear like a colourless, tasteless offering from a Soviet Russian store. Not exactly the glitzy marketing effort that would sell its virtues to the sales-savvy big retail sector.

However, as Gok Wan is currently demonstrating to great effect with his new series, a little bit of skilful handiwork can quickly turn a sow's ear into a silk purse.

It is surely possible for the large retailers levy to be reviewed, rebranded and reboxed. Yes, it should be returned to the shelves of the Holyrood policy store, but this time with a few additional features to tackle the criticisms that it attracted in its bargain basement state.

First and foremost, all taxes must have a purpose. If a tax on big retail is indeed to be levied then even their representative body, the Scottish Retail Consortium (SRC), recognises the value, and crucially the fairness, if this money is to be recycled into our town centres. This is the same point made by the vast majority of retailers, the small independents, and articulated by their representative body, the Federation of Small Businesses.

Giving evidence to the parliament's local government committee, alongside its colleagues in the SRC, the FSB was at pains to ensure that our parliamentarians understood that here is a chance to build upon the Town Centre Regeneration Fund, and develop a sustainable funding model for supporting the beating hearts of our communities.

This desire to help town centres already has unanimous support across the parties in parliament, so it is very frustrating watching them descend into a political price war over an issue which should actually unite them in earnest endeavour. If there is broad agreement that savage spending cuts, as currently being visited upon the English public sector, are to be avoided in Scotland, then one way in which to tackle the budget deficit is to raise more taxes.

However, we haven't got a history of targeted taxation and hypothecation is a big word for our wee parliament.

Surely, though, the Calman legislation, for all its unnecessary complexities and overtly politicised purpose, will bring with it at least a basic idea of what taxes are for, what level they should be set at, who decides how they are spent and, crucially, who should pay them.

Without this fiscal discipline, tax proposals like the large retailers levy will always be in danger of being viewed in the abstract - as general revenue-raising schemes, not funding targeted economic or social interventions, backed by policy principle. This lack of a direct link between taxation and the social or economic benefit that it is designed to bring about has been a consistent weakness of Holyrood. It is time that the Scottish Parliament took responsibility for raising its revenue to fund its own social programmes and for creating the capital to finance economic investment projects.

Another way to democratise public expenditure is to localise. The large retailers levy could, for example, be devolved to the local level, but ring-fenced for town centre regeneration. This form of hypothecation is likely to become ever more popular as the various spending departments of the local state fight over a slice of the decreasing national expenditure pie.

Furthermore, if the levy was also to fall on other sectors operating in the high street, such as the banks, carbon-heavy office blocks or even industrial premises that should be encouraged to relocate from congested town centre streets, then it would be seen in a different light entirely. It could even develop a green core.

If our MSPs are serious about employment and the ability of workers to shape their own operating conditions, then an exemption for social enterprises, co-operatives and other mutuals would be in order.

By tailoring the tax to suit these other policy aims, as well as simply generating revenue, the parliament could clearly demonstrate a social as well as an economic purpose for this new tax.

And what of the parties, what ideas might they individually bring to the inevitable post-election shopping trip for new ways to balance the budget? Could they actually move towards the style of new politics which our parliament was meant to usher in? Is it likely that they will develop, through cogent discussion and debate in an atmosphere of intellectual rigour, against an evidence base supplied by academics and practitioners, a basket of policies that could create a more positive context for the isolated Tesco Tax?

If the political focus is to switch from being dazzled by the brilliant, full-on marketing blitz of big retail attacking this tax, what other products might we see moving along towards the Holyrood policy till? In these times of economic constraint,
are we for example, likely to see a move towards more vintage policies? Like their clothing counterparts, these policies could be right back into fashion.

For example, a workplace parking levy, city congestion charges, inter-city motorway tolls, not to mention bridge tolls. These demand management measures for our transport network were all pushed in the 1980s and 90s, but although they were more fashionable elsewhere, they didn't prove popular here in Scotland. However, in these times of economic restraint, when the only other option is to slash services, will our MSPs have the imagination, skill and ability to persuade the public that demand management measures of this nature have their place in a fair and civilised society?

To put the Tesco Tax into perspective, it is worth noting that the projected £30m to be raised is a tiny 0.001 per cent of the Scottish block grant from Westminster, which currently stands at an eye-wateringly unsustainable £30 billion per annum. The political benefit, if taken on its own, is akin to the loyalty card points gained from a single visit to the ubiquitous supermarket. In other words, a very small gain for an awful lot of political pain. So why take it on in the first place?

We can hope our politicians want to do the right thing, and that they come to a considered conclusion after open, honest debate, rather than them viewing this proposal as a precursor to the introduction of yet more stealth taxes. Make no mistake, tax rises, new taxes and more charges there will be, so let us at least have it out in the open and not see tax rises sneaked in after the ballot papers have been counted.

If the parties are indeed serious about raising revenue to invest in infrastructure and service improvement, especially in our town centres, maybe they could learn from the supermarkets themselves.

In the run-up to this election, the parties could be promoting more policies that may cost them a little politically in the short term, as loss leaders if you like, knowing that the majority will happily endorse them come election time. Every little helps!

Ross Martin is policy director of the Centre for Scottish Public Policy

1 comment:

  1. "It could even develop a green core" ? As a tax on out of town supermarkets with mass food miles, refigereation and processed food is had a green core.

    It wasn't rational the reasons for its demise it was purely tribal.