Supermarket levy to revitalise struggling town centres will ‘raise price of food’ because profit margins are too thin
Calls for councils to be allowed to impose a ‘supermarket levy’ to help revitalise town centres could force up food prices, supermarket insiders have warned.
The proposal for new powers has been put forward by a coalition of 20 local authorities led by Derby City Council to raise funds to reinvigorate Britain’s town centres. It could amount to as much as £400million.
No fat to trim: Supermarkets insist their profit margins are too tight to withstand a levy.
But supermarket insiders warned that the stores are not a ‘bottomless pit of money’.
‘Profit margins at supermarkets are wafer thin. You cannot just continue to take money out in taxes before prices will have to rise. The business rates system needs overhauling and simplifying and this would only add more of a burden and more complexity,’ said one supermarket source.
But Derby City Council leader Ranjit Banwait said this weekend that life was being ‘sucked out of the city centre’ by large warehouse-style stores based out of town.
Arguing that Tesco, Asda, Sainsbury's and the other dominant supermarket chains kill off small retailers and have a detrimental effect on town centres, the town halls claim they should pay back into the community via a new local tax.
Derby City Council heads the coalition of 20 local authorities bidding for the introduction of an extra business rates levy worth up to £400million a year.
Details on how the money would be used are vague, but include 'helping small business' and regenerating community schemes and parks.
But the Department for Communities and Local Government today made clear it remained opposed to such a move, arguing it would hit poor families by pushing up food prices.
And a former retail chief who proposed a one-off raid on the profits of retail giants to fund the regeneration of declining high streets warned it must not become a regular charge.
The submission has been made under the terms of the Sustainable Communities Act which encourages local initiatives and would apply to stores with a rateable value of £500,000 or more.
The submission - which is backed by Tory and Liberal Democrat-run authorities as well as Labour-controlled Derby - is described as 'a modest attempt to ensure more of that money re-circulates within and continues to contribute to local jobs and local trade'.
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