My Levy is Your Tax

Leigh Sparks - Stirling Retail

It might not have been in the manifesto, but it certainly made headlines. Wandering into the newsagent yesterday morning, John Swinney would have seen an almost uniform newspaper lead coverage on his new “Public Health Levy”.

Only, the words used were a little different – shop raid, smash and grab, price hikes, shopping bill tax, commitment breach. The only health issues involved were the collective raised blood pressures of the journalists, editors and the food retailers – oh, and the impotency of the opposition parties in the Parliament to do anything about it this time.

After suffering a bloody nose last year in the rushed, botched version one of the ‘Tesco tax’, John Swinney has come back for more. Only this time he’s brought his backbench majority friends to the (now one-sided) fight. Putting lipstick on the pig of the supermarket tax, we now have a ‘public health levy’ – and who could be against public health?

As ever, the detail will be revealing, not least for the legal wriggle room it offers and the operational reactions it will induce. But the idea of having food retailers (through a black hole, sorry hypothecated box) pay for health prevention activities seemed to go down really badly with the newspapers.

Their view was that the last people who will pay for this will be the retailers. The extra costs (£30m, £35M whatever per annum) will get passed on to suppliers and/or consumers. The idea of differential prices in England and Scotland as a direct consequence would seem peculiar however and even more costly for retailers; unless of course they really wanted to make a point – a retail equivalent of Stelios’ “fat bastards tax” on Luton airport perhaps. Maybe less “public health levy” and more “Swinney’s messages money grab”.

The issue is why tax the food retailers when the there is so much else that is possible or wrong? It is like taxing drug dealers whilst subsidising drug producers. There is much in this that is “illogical and discriminatory” to quote the Scottish Retail Consortium. That of course does not make the basic idea (prevention is cheaper than cure) wrong; but does open up the need for a full debate on what we should be doing and how.

Why tax large retail stores, when convenience and other small stores are so much more dependent on fags and booze for sales and in turn their local consumers are so much more dependent on these small stores for their supplies? Tax them, close them down and the supply in local areas is cut off. Why not tax bars, pubs, hotels, nightclubs, political, social and sporting clubs where alcohol and tobacco are every bit as significant and over-consumption is rife?

And if we really want to do something about health, then a “fat tax” on McDonalds and other fast food chains and local chippies ought to be on the agenda. Or maybe we could go the other way and have tax relief for spas and health clubs? What about those retailers who hit targets for anti-smoking promotion or product sales, or on healthy or low fat foods?

So why supermarkets and/or large retailers? Expediency perhaps, revenge for last year possibly? Or maybe it is because they believe the ‘chattering classes’ that supermarkets and superstores are evil and people hate them. But there’s the rub – even in the most vociferous of the places fighting new supermarket development, substantial numbers (often majorities) of local people are still in favour of such development.

And week in, week out, across Scotland people shop in, and feel well served by these stores. Supermarkets and superstores hit the consumer spot in far more cases than they miss. Forcing the daily and weekly shop to become more expensive or difficult is not really a vote winner with lots of people, despite what some of the rhetoric says.

Let’s have the debate on health and prevention and the environments we are all exposed to and the abuses they can create. But don’t pretend this is a “Public Health Levy” in a true thought out sense; it is an expedient money grab from businesses perceived to be able to afford it.

From the business perspective, all businesses need to be concerned about this tax, as logically it could be extended in many directions. The already known rapid rise in business taxes over the next few years in Scotland is going to produce real problems. Who knows what the trailed empty property (vacant shop) relief revisions will look like and do?

But for retailers, what would really concern me most is the certainty of falling real incomes for the next three years, due to pay freezes, pension costs increases, general inflation, probable spiking utility and other costs and all the other bad news out there,. Where are the sales going to come from in the next few years? And what new retailers are going to soak up these (and those still to come) empty premises?