Supermarkets say Tesco tax would raise the price of food

Supermarkets say they already pay a large amount of tax (Source: Getty Images)
A senior executive at Sainsbury’s slammed proposals to levy another new tax on supermarkets yesterday, saying that the plans would lead to higher food prices.

Derby City Council has proposed that local councils be permitted to introduce a “local levy” to supplement existing business rates, adding up to 8.5 per cent, to be kept by the council.

The original request, which would amend the Sustainable Communities Act, said that supermarkets had a “damaging impact” on their areas and an “unfair advantage” which hits local economies.

But representatives from the industry hit out at the report yesterday, arguing that the sector already provided a large amount of tax and made positive contributions locally.

“The burden of business rates on retail is enormous, and high street retailers already contribute disproportionately to funding local services. Any further increase in business rates paid by supermarkets would inevitably contribute to higher food prices for consumers,” said John Rogers, chief financial officer (CFO) at Sainsbury’s.

The report was originally released at the end of last year, but the proposal – dubbed the Tesco tax – was formally submitted this week and reportedly has the backing of around 20 local authorities.

“A large amount of their profits aren’t being ploughed back into the local economy”, said Ranjit Banwait, leader of Derby City Council.

George Osborne and the DCLG are opposed to the plan, however.

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