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English councils propose 'Tesco Tax' for large retailers to aid local economy

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By John McCarthy | Media editor

July 28, 2014 | 3 min read

English local councils are asking Westminster for powers to impose a levy, dubbed the ‘Tesco Tax’, upon large shopping chains to raise cash for communities.

The 'Tesco Tax' could help local business compete

The levy, backed by 19 local authorities, is already in place in Scotland and Northern Ireland and could provide £400m annually.

However, critics claim that taxing the retailers would drive up prices.

Derby City Council floated the idea to government under the Sustainable Communities Act with the intention of using the revenue to aid small business and rejuvenate public spaces and community centres.

The plan said that although consumers can benefit from large supermarkets in the area, large retailers can have a detrimental effect on the local economy.

It read: “Research has shown that 95 per cent of all the money spent in any large supermarket leaves the local economy for good, compared to just 50 per cent from local independent retailers.

“This levy is a modest attempt to ensure more of that money re-circulates within and continues to contribute to local jobs and local trade.”

Large retailers with a rateable value of more than half a million pounds could be affected by the business levy, which could be as high as 8.5 per cent.

Ranjit Banwait, head of Derby City Council, said: "The revenue that we'll be able to generate will mean that we can support local businesses - especially small businesses.”

He added: "We'll be able to improve public services."

The government will have six months to respond to the levy-request and if accepted, retailers throughout the whole of England will be subjected to the tax.

For Tesco, this comes after Philip Clarke left his postion of CEO last week after the retailer saw a six per cent drop in profit over the last three months.

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