In early 2011 the Scottish Government’s proposal for a large store levy was rejected in the Scottish Parliament. In its Autumn 2011 budget proposals the initiative re-emerged but fashioned differently as a ‘public health levy’, targeted at large retail stores (defined as a rateable value in excess of £300k) selling tobacco and alcohol.

Since the initial budget announcement there have been various statements about the nature and purpose of the levy and much heated discussion. My thoughts on the whole affair from last Autumn can be found on this blog. The levy was initially intended to raise £30 million in the first year rising to £40 million in subsequent years (£110million over three years) and was seen by many as a way to fill a budget hole.

When the budget was passed on the 8^th February 2012, the Government reacted to these various criticisms by reducing the take by £5m per annum (a supplemental rate of 9.3p was identified) and added a “sunset” clause to end the levy after three years. So we are now a little closer to knowing who might be affected and to what extent.

We are working on a wider project to think about this levy and its meaning and impact and to set such approaches (see also Northern Ireland) into a broader context. As part of that we have produced a very short briefing report which pulls together data on rateable values and store sizes to think about some of the potential impacts. This is a very limited and initial set of thoughts, but we thought it might be useful to share them. The report can be found in the download section of this blog or here (IRS Briefing Paper on Health Levy).

The levy is seen by some as “levelling the playing field” (between large and small retailers, if not between Scotland and England) and by others as a tax grab to fill a budget hole. It is clearly subject to variations and idiosyncrasies of operation and may make retailers in some places question how they can continue to trade profitability without passing on the tax to Scottish consumers or by seeking to restore profitability by reducing costs, which in retail inevitably means looking at the numbers of jobs and the hours of work.

Many applaud the Scottish Government’s consistent willingness to tackle alcohol and tobacco health issues in Scotland, but this levy seems an odd way to build consensus and take effective action, singling out as it does one part of one sector of the trade in these products and not relating the levy to the level of activity in that trade.