Swings, roundabouts and a ‘Tesco Tax’ in the Scottish Budget

22 September 2011

swingIn the UK we are lucky enough to have Gideon ‘George’ Osborne as our beloved Chancellor, but Scottish people have double the delight, as Finance Minster John Swinney, the SNP’s Finance Minister, acts as a mini-Chancellor for the devolved costs controlled by Scotland in Holyrood.

However, despite Swinney’s latest ‘Budget’ promising to uphold the populist giveaways previously announced by his party, including a council tax freeze, free prescriptions and free bus travel for the elderly, the cost of these freebies may  not be acceptable to everyone.

The bill for these hand outs will be met via cuts in spending on all but a few public services, a £1 billion reduction in council budgets, a public sector pay freeze and a new ‘Tesco tax’ on large shops that sell alcohol and tobacco.

According to documents accompanying the Budget, councils are facing a £959 million cut in their spending money over the next three years and they will also be forced to borrow to build new schools and roads instead of receiving most of the funding from the Scottish Government.

Councillor Kevin Kennan said: “That can mean only one thing a significant reduction in local services and local spend, neither of which is good news for local economies throughout Scotland.”

The Tesco Tax is not popular either. Described as a new “public health levy” in the form of a business rates supplement paid by large retailers who sell both alcohol and tobacco, the charge is scheduled to come into force from April next year.  However, retailers warned that the cost could be passed onto consumers.

Ian Shearer, director of the Scottish Retail Consortium (SRC) said: “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.”

Jeremy Beadles*, chief executive of the Wine and Spirit Trade Association said: “The tax on large retailers will place an additional burden on Scottish businesses and push the price up for all consumers regardless of whether they consume alcohol at all."

In a statement to the Scottish Parliament, Mr Swinney said: “Against this stark backdrop, we are determined to make the very best use of the constrained resources available to us and to build on the progress we have made over the past four years.”

The Tesco tax is projected to raise around £110 million over the next three years and Mr Swinney said the levy was "fair and proportionate".

All the other major Scottish political parties have offered scathing comments on the SNP Budget, but such criticismis likely to be academic as the SNP now enjoy an overall majority in the Holyrood chamber. In previous years Mr Swinney has been forced to conduct rounds of bartering with the other parties to gain parliamentary rubber stamping for his spending plans, but without the need to seek cross party approval, the SNP financial plans will out, and Scottish consumers will lose out.

* Presumably this is his real name.

TOPICS:   Tax   Travel


  • Euan
    Wonder whether the retailers will try and absorb / pass on that cost across the board, or just go for highlighting the tax. Like the shelf stickers could read "£15 (Our price £13 + £2 Swinney Tax)" ... and break out that on the receipt too. Or if it's only paid by large retailers selling alcohol AND tobacco, stop selling tobacco in the main store, and open a tobacconist next door? :)
  • Noghar
    “Supermarket margins are already cut to the bone as stores compete to offer the best deals to cash-strapped consumers. " How many billion quid profit does Tesco make every year? Diddums.
  • Touchwood
    Sell fags and booze online and offer collection points either at or adjacent to supermarkets. The supermarkets aren't selling these evil substances themselves; they are simply acting on behalf of the online seller.
  • LD
    Good - go for it Alex. No cosying up to terry leahy like the last Labour gov. It's sheer greed from Tesco's steam rolling themselves and destroying local pubs and High Streets. 'What the customer wants' - aye right
  • Tony
    Wow. It's just like reading The Sun. Let's step back and think about this. 1. Consumers have no money. 2. Tesco et al make billions selling booze and fags that cost the public different billions in health and social care. Do we a) make the big companies pay their fair share or b) run scared of them. I vote a). So did most of Scotland. Not only do Scottish consumers not lose out - we gain. Unless your only concern is buying 50 bottles of German lager for 75p.

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