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A powerful Labour message is that there is a “cost of living crisis”. There will always be some of us facing a “cost of living crisis” – even in periods where wages generally rise ahead of inflation. Similarly such a crisis could hit the rich – a businessman who takes a risk and then has his home repossessed after losing everything. If the Conservatives respond by denying there is a “cost of living crisis” that is an annoying message for those struggling to pay their household bills. Alternatively, accepting the premise of such a crisis is an admission of failure.

So rather than getting drawn on whether or not the “crisis” facing individual families could fairly be described as constituting a generalised crisis a more fruitful matter for debate is which party has the policies to reduce the cost of living.

In this context the Communities and Local Government Secretary Eric Pickles is quite right to resist demands from Labour council leaders for a Supermarket Tax.

Mr Pickles told Cllr Ranjit Banwait, the Leader of Derby Council:

“You submitted a proposal under the Sustainable Communities Act to impose a new tax on large shops and supermarkets. You asked that town halls be given the power to levy an additional tax of up to 8.5 per cent of the business rate on large supermarkets or large retail outlets in their area, with an annual rateable value over £500,000. I note that this is not just a tax on supermarkets, but also a tax on department stores and shopping precincts.

“The Coalition Government does not support these calls for higher taxation. Larger premises already pay higher business rates, as a business rate bill is directly related to the Rateable Value of the premises. In any area, bigger premises have a bigger Rateable Value; moreover, larger firms are not eligible for many of the various reliefs and also pay a higher multiplier.

“Imposing new, additional taxes on supermarkets and larger shops will ultimately push up the price of food and the cost of living, hitting low-income families the hardest. Supermarkets should certainly act with social responsibility, but equally, we should also recognise they play an important role in our society and free market in providing convenient, accessible and competitively priced food.

“We ruled out such a similar bid for higher taxes on supermarkets under the last round of the Sustainable Communities Act proposals. Such tax would invariably reduce investment in new and existing stores and hit jobs.

“Your submission cited the example of Scotland. However, it failed to mention that the Scottish Government is now abandoning their new tax because of the negative consequences. It also cited Northern Ireland, however, it did not consider that their system of small business rate relief is less generous than that currently available in England.

“There are much better ways to support small shops – not least by cutting taxes, rather than increasing them. The Coalition Government’s long-term economic plan has supported local high streets with a billion pound package of investment that includes a £1,000 discount forsmaller shops, doubling small business rate relief, making small rate relief easier to claim and a new relief to get empty shops back into productive use. We have also introduced sensible planning changes to get empty buildings back into use and increase the resident population of town centres, as well as action to tackle over-zealous parking practices.

“The Localism Act 2011 has also given councils new powers to introduce local business rate discounts. Following the reforms in the Local Government Finance Act 2012, central government now funds half the costs of all local discounts granted. This is part of a series of steps by the Government to help support local shops and local high streets and spread best practice by councils.

“Certainly high streets face challenges, but this is as much about the way that the internet is changing the way we shop in the 21st Century: and it is as challenging for supermarkets’ old business models, as much as it is for small firms. In that context, your proposal is sadly an all-too predictable siren call from some parts of local government: namely, the solution to every policy issue seems to be how to impose new taxes. This is a lazy way of thinking.

“Councils already have a wide range of powers to support local high streets and small shops – across parking, planning, licensing and the night -time economy, street markets, improving the street scene, supporting ‘click and collect’, tourism promotion, to exercising their role as a landowner in their own right.

“The Localism Act also gives councils a new general power of competence. My department’s high streets team would be happy to provide some further advice and best practice.”

There are plenty of other examples of how the Conservatives offer a better prospect for for easing the cost of living. Lower energy bills through the development of shale gas has huge potential – as would scrapping the misconceived “green” levies.

The renegotiation of our EU membership followed by an in/out referendum offer two chances for us to be rid of the Common Agricultural Policy. The OECD/World Bank calculates that would allow food prices to fall by 17 per cent.

The issue about the cost of living is not whether it is a challenge. Of course it is. The question is how people can cope with the challenge more easily. A supermarkets tax would make the challenge worse – Mr Pickles is right to have said so in such robust terms.

9 comments for: Labour’s proposed supermarket tax would mean higher food prices

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