Scottish government plans for a small levy on large retail outlets to help offset cuts to the Scottish block grant have been rejected after Labour joined with the Tories to back a Lib Dem motion.
The SNP proposal would have raised £30 million at a time when Westminster is about to impose a cut of £1.3 billion to the Scottish budget.
The proposal, which would have brought Scotland’s rate into line with rates in England, was described by all three of the unionist parties as “anti-competitive”.
Finance Secretary John Swinney pointed out that the move would affect only 0.1% of businesses and that funds raised would help protect families who will be hit hardest when the repercussions of Labour’s economic mismanagement are finally felt.
The £1.3 billion cut to the Scottish budget had, Mr Swinney said, been compounded by the recent VAT increase that would cost Scotland a further £1 billion. The Finance Minister insisted that the SNP’s aim was to protect families as much as possible during these times and that the £30 million would help maintain policies such as the council tax freeze.
Mr Swinney said:
“The issues that we have had to face in this budget have been acutely difficult in this year and the choices that I’ve made have been to support family and household budgets as far as possible despite the reduced resources available to me. For example, freezing the council tax for a fourth year in a row which I know is unpopular on the Labour benches was a key priority and one that will help families across Scotland.”
Mr Swinney described small and medium sized businesses as “the lifeblood of Scotland” as they account for 99% of all enterprises in Scotland. He added that the levy on large stores would help provide relief to those businesses.
Labour’s Andy Kerr described the levy as “anti 8000 jobs” and went on to criticise the decision to cancel the Glasgow Airport Rail Link, adding that the SNP had “a disregard for the economy and for jobs”. Mr Kerr claimed the SNP had “misled” the business community saying that the levy would hit town centre shops.
When asked to comment on Port Glasgow town centre, which has been decimated by a huge Tesco supermarket nearby, Mr Kerr claimed not to be sure of “that particular part of the country” and went on to claim that his town of East Kilbride would lose “thousands of jobs” if the levy went ahead.
The decision by the Unionist parties to block the levy was condemned by Green MSP Patrick Harvie who described the SNP proposal as a way of “offsetting the worst of the Tory cuts” and a way to address the problems that arise when four massive companies “dominate the food chain”.
Mr Harvie also called into question the motives of the Labour, Tory and Lib Dem parties in blocking the move and revealed that all three had benefitted from the “largesse” of the big retailers in the form of lucrative donations.
Mr Harvie revealed that:
Since 2003 the Labour party has received over £10 million from Lord Sainsbury, £99,000 from Tesco, £28,000 from Asda and £10,000 from Selfridges.
The Lib Dems, he said, had received £35,000 from Tesco and the Tories £30,000 from Selfridges and £6000 from Asda.
Mr Harvey called for a discussion on whether political parties should be forced to declare financial interests when debating on matters relating to their donors.
Lib Dem Jeremy Purvis, who lodged the motion opposing the levy, said: “It could be argued these large developments will be significant, which can contribute to economic growth and there may not be a case for imposing a financial burden.”
Mr Purvis opposed the levy despite listing on his website “more support for local retailers struggling against the big supermarkets” as one of his top 11 priorities for the Scottish Parliament.
The SNP proposal was rejected by 68 votes to 46 despite almost three-quarters of Scotland’s businesses supporting it. According to Scotland’s most important business organisation the Federation of Small Businesses (FSB) Scotland, 74% support the SNP proposal of a small tax increase on the large retail giants.