Many Councils including Derby City, Weymouth & Portland Borough and East Sussex County Council have indicated their support for a proposal under the Sustainable Communities Act to the Secretary of State to:
a) give local authorities the power to introduce a local levy of up
to 8.5% of the rate on large supermarkets or large retail outlets
in their area with an annual rateable value not less than
£500,000; and
b) requires that the revenue from this levy be retained by the local authority in order to improve local communities in their areas by promoting local economic activity, local services and facilities, social and community wellbeing and environmental protection.
Council officers have indicated this proposal could raise over £600,000 if implemented today in Medway. Would the Portfolio Holder agree to explore this proposal and bring back the appropriate report to Council?
Minutes:
Many Councils including Derby City, Weymouth & Portland Borough and East Sussex County Council have indicated their support for a proposal under the Sustainable Communities Act to the Secretary of State to:
a) give local authorities the power to introduce a local levy of up
to 8.5% of the rate on large supermarkets or large retail outlets
in their area with an annual rateable value not less than
£500,000; and
b) requires that the revenue from this levy be retained by the local authority in order to improve local communities in their areas by promoting local economic activity, local services and facilities, social and community wellbeing and environmental protection.
Council officers have indicated this proposal could raise over £600,000 if implemented today in Medway. Would the Portfolio Holder agree to explore this proposal and bring back the appropriate report to Council?
Councillor Jarrett stated that whilst he would welcome any proposals to raise extra money, particularly now that Councillor Osborne had just advocated throwing away £160,000 without any idea of what it would do to the Council's revenue budget, there were inherent problems with this proposal.
The supermarket levy was the product of a campaign group called Local Works. They had been lobbying Councils to ask government to let them have the power under the Sustainable Communities Act to impose a new 8.5% tax on retail units whose annual rateable value was over £500,000. The proposal was based on legislation passed last year by the Northern Ireland Parliament to add a levy on large supermarkets of 8.5% based on their current rateable value. Last year the Scottish Parliament passed similar legislation for a levy of 9.3%. The Council had the power to submit such a proposal to central government, provided it had consulted and had due regard to specified matters set out in the Sustainable Communities Act, but it was Central Government's decision whether or not to implement the proposal and make the necessary legislation.
A number of Councils had considered the request and decided not to pursue it further including Dover, Leeds and Bristol.
Councillor Jarrett stated that officers had investigated the likely income from such a levy in the Medway area last year and he confirmed they had identified 13 properties that would produce a total of £642,000 in additional income. However, there were many other considerations, both for and against the proposal.
It was properties such as these that generated large amounts of business rates income for the Council already and provided valuable extra jobs in the area. If Medway was to be the only authority in Kent implementing such a levy, it was quite possible that supermarkets would choose to invest elsewhere or indeed supermarkets that were thinking of investing here would curtail that investment.
In addition there was also the argument if such a levy was imposed this would simply be passed on to customers. He stated that those arguments took primacy with him.
There was no current power in legislation allowing Councils to impose this levy. Councils had powers to submit proposals to Central Government under section 5A of the Sustainable Communities Act 2007. Before making such a proposal the Council had to have regard to a number of matters specified in the schedule to the 2007 Act and consult and try to reach agreement about the proposal with representatives or interested local persons as set out in the Act.
Councillor Maple stated that he was grateful for the clear position Councillor Jarrett had on this issue. He stated that Councillor Jarrett was quite clear in his thoughts that this would be passed on to customers. He asked whether Councillor Jarrett would give some thought to the fact that when his Government introduced the 2.5% increase on VAT, supermarkets actually had a price war and cut their prices. This had benefited the residents of Medway and elsewhere.
Councillor Jarrett stated that whilst this may have been so on that occasion, the Council's duty here was to consider as best it could the impacts of local measures taken here in Medway and his view was not to seek to impose the levy. He added that there could be further debate on this on another occasion if Councillor Maple wished so.