Large retail levy proposal should be shelved, says Sainsbury's chief
Published 18/10/2011 | 08:00
The boss of one of the UK's biggest supermarkets has described the Department of Finance and Personnel's (DFP) proposed large retail levy as "inherently wrong".
Sainsbury's chief executive Justin King said the plans for the levy, the proceeds of which would be used to fund an extension of the small business rate relief scheme, could affect its future investment decisions.
The proposals would see increased rates from retailers like B-amp;Q, Tesco and Dunnes redistributed to small businesses. A consultation on the levy closes today.
Mr King said: "There's something sort of inherently wrong in the idea that one group of businesses should be taxed to subsidise another group of businesses.
"There's a sense that the big guys can afford to pay for it but in reality there are many profitable small businesses just as there are unprofitable large businesses therefore it's going to be indiscriminate in its effect."
And he suggested members of the public would not be comfortable with the effects of the scheme.
"There will be many small business that benefit that I imagine the public will find quite difficult.
"I find the idea that we might be subsidising bank branches quite difficult. Why do we need to do that?"
He said the levy was "about taxing perceived success".
"It is precisely thriving business, viable businesses, successful businesses that create the best jobs and the best prospects for jobs in the long-term.
"Whilst we won't back away from individual investment decisions for stores we already own, it will have a very damaging effect for businesses like ours on future investment decisions."
He added: "Long-term it will damage Northern Ireland's prospects for investment."
During his visit to Northern Ireland, Mr King took a trip to a new Sainsbury's' store in Bangor, which is creating 250 jobs for the area.
He said it was public outcry over the loss of potential job creation which led to proposals for a similar scheme being dropped in Scotland.
"Northern Ireland is a costly market base to do business in as it is. This is just another cost which will act as a disincentive to businesses setting up here."
Finance Minister Sammy Wilson hit out this week at a statement by the Northern Ireland Retail Consortium (NIRC) that said the scheme would help bookies, pubs and banks.
"Both the current small business rate relief scheme and the proposed expansion would help a wide range of businesses in all sectors."
Mr King said other high costs in Northern Ireland included a planning regime that was "by far the most complex and costly" in the UK. Pharmacy licensing was also complex, meaning pharmacies which had appeared in Sainsbury's supermarkets elsewhere in the UK were yet to appear in stores in the province.
Mr King also spoke about Sainsbury's most recent results - growth of 1.1% in the quarter to October 1 compared to a fall in Tesco sales.
Competitiveness on brand pricing, higher ethical trading standards and better food were among the reasons for the rise.
And as Sainsbury's welcomed a new celebrity face to its stable, with TV stylist Gok Wan launching a new womenswear stage, it is also saying goodbye to Jamie Oliver, who has fronted Sainsbury's ads for 10 years.
There are no dramas, Mr King said, and both sides simply decided it was time to quit. "I know people think there was another story behind it but it was just that we both thought it was time to stop.
"But Oliver will still front Sainsbury's Christmas campaign."
As for Gok Wan, Mr King insisted the stylist had designed the clothes even if it took another team to get them out into stores.
The range will only account for 5% to 10% of the womenswear offering in a big store like Holywood Exchange, Mr King said.
"Lots of people will buy their first garment from the Gok brand and then they'll give us a try across the rest of the range," said the chief executive on Sainsbury's hopes for the tie-in.