Blog: Retailers take on 'Tesco tax'

Michelle Russell | 3 April 2012

Retailers in Northern Ireland have slammed the introduction this weekend of the so-called 'Tesco tax'.

The levy to subsidise rates (government tax) relief for small businesses been labelled as "short-sighted" by the Northern Ireland Retail Consortium (NIRC), which argues that it unfairly targets larger retailers and could send investment elsewhere.

The levy affects retail properties at the GBP500,000 (US$769,174) rateable value threshold and above, which is the value attributable to a property on which the final rates bill is calculated. It should reflect the rental value of the property.

To raise the required GBP6.5m would equate to an 11 pence regional rate supplement (at 2011/12 levels), increasing rate bills on those properties by around 20% on average.

The actual impact of the levy on bills would vary by district council area, from around 18.5% to 22.5%.

A spokesperson for the NIRC told just-food that while it is happy to see support for small businesses, the legislation may force global retailers to look elsewhere to invest.

"Our problem with the legislation in Northern Ireland is it is solely large retailers that are being asked to pay extra, even though the small businesses that will benefit come from a wide range of sectors.

"It's unfortunately that in the current climate there should be a priority on attracting investment, and we think it sends out a rather unfortunate message about Northern Ireland, which is that if you invest in such a large store in Northern Ireland, sadly then you might be seen as a sitting duck to be taken advantage of.

"Many of the large retailer operate on a global stage so when times are tight and they are looking at where to invest capital, they obviously will weight up the return that investment can get across the globe, so our fear is that they might take that investment somewhere else," she told just-food.

Stormont Finance Minister Sammy Wilson, however, has reportedly said the levy represents a "minuscule" proportion of retailers' profits.

"I'm fairly confident if there are changes in employment, it will not be due to the levy," he told the BBC.


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