Sammy Wilson's store levy... now the questions begin over who’ll pay and who won’t
The new levy on large businesses has been labelled a blunt instrument because of a number of companies exempt from it.
Finance Minister Sammy Wilson has faced stark criticism after he opted to put up the rates of 76 retailers by an extra 15% for three years. Under this Big Retail Levy, companies will pay an extra charge of £66,000 a year, on average, raising £5m — which will be used to help small traders.
But in an interview with the Belfast Telegraph earlier this week, Mr Wilson said he recognised the limits of his proposals.
“If we want the scheme operative by April next year and we want to try to avoid a successful legal challenge, then the best thing to do is to keep it simple,” he said.
“I know it’s a bit blunt and I would have preferred a more refined scheme.
“There are targets I would have liked to have gone after more than others, but that has not been possible, and therefore we’re really doing this on the basis of the sectors we believe can afford it most.”
Ikea — which faces an extra annual bill of £250,000 — and B&Q have hit out at the move and accused the minister of putting jobs at risk. A spokeswoman for Boots last night said it was disappointed an additional tax is being imposed on large retailers “at a time when we should be working even harder to sustain business in local towns and high streets”.
There are quite a few big Northern Ireland-based firms, however, that do not feature on the Department of Finance’s list. Chain Reaction Cycles, the world’s largest online bike store, does not have to pay the extra levy.
A spokesman for the company, based in Doagh, yesterday declined to comment on the tax.
Northern Ireland’s largest motor retail group Charles Hurst is also exempt from the levy.
SuperValu, Centra and Mace stores — part of Musgrave Group — may be eligible for the Small Business Rates Relief Scheme.
This has struck a sour note with other retailers who point out that the Musgrave Group has a bigger penetration in Ireland than Tesco.
Mr Wilson previously rejected the Finance Committee’s proposals to also charge banks, hotel chains, utility firms and telecommunications companies.
In an interview, the minister said that he stood by his decision to tax only businesses with a rateable value of more than £500,000.
“There hasn’t been a rates revaluation since 2002 which created an unfair advantage for some of the larger stores,” he said. “Over the period since 2002 until now, the percentage of shopping which has gone to larger stores has increased.
“Their percentage of GDP has increased and you would expect that, had there been a revaluation, their valuations would have gone up and the valuations of the sector which had had a relative time would have gone down.
“The Small Business Rates Relief Scheme is an attempt to try and reflect some of the difference which has arisen because there has been no revaluation in Northern Ireland for nine years.”
The scheme will be time-limited in legislation to three years, until March 31, 2015, by when revaluations will have taken place.
Mr Wilson also said that his decision not to broaden the scope of the businesses subject to the tax was to avoid legal challenges.
“The more you try to target a scheme like this, the more open you leave it to challenge,” he said.
“The one thing I don’t want to do is to start making refinements to the scheme which make it more open to legal challenge.
“You could find that you spend half the next three years fighting about this in the courts so you don’t get the scheme into place. The problems are immediately being experienced by businesses so I want to find a way of getting this relief to them as quickly as possible.”
Story so far
Sammy Wilson’s new tax hasn’t gone down well in some quarters. Jane Bevis from the Northern Ireland Retail Consortium, which represents retailers including Tesco and Boots, said it threatened growth. Meanwhile, the Federation of Small Businesses and Northern Ireland Independent Retail Trade Association welcomed the scheme, having lobbied for it. Applicable to 76 retailers, the aim is to raise £5m to help small traders. Businesses with more than three branches will not qualify for the rate cut, including bookmakers' chains and bank branches.