Tuesday, 10 December 2013

The Tesco Tax

Posted on December 15, 2011 by stephennicholl So the Finance Minister’s Small Business Rate Relief scheme is to proceed albeit with a few minor changes. First we should congratulate Glynn Roberts and those who lobbied for such a scheme, in the field of lobbying Glynn has his own style and finds common cause with like-minded individuals to ensure that the issue of the day is foremost in politician’s in-tray. Being a lobbyist, does not however mean that your argument is always right. The process proposed by the Finance Minister is an exercise in the redistribution of wealth, a crude attempt to take from those perceived to be better off (the big retailers) to give to those perceived to be struggling (the small retailer). But we should consider whether or not this represents value for money. Certainly it is more likely that the revenue will remain in Northern Ireland if redistributed to small local businesses, however, should one large retailer pull out of Northern Ireland or delay expansion until post 2015 then the benefits to Northern Ireland PLC will be lost as will the employment and rates income attached to the larger retailers. Now let’s consider the 8,300 businesses which will benefit from the extra £15 per week they will gain from this measure. At such a marginal level some of these businesses will fail anyway so any money they gain from this process will be lost. Many of the businesses will continue irrespective of whether or not they receive this relief therefore as such the investment provides little or no return on the investment. Finally what about those for whom the relief will make the difference between surviving or going under. There will be few, if any, for whom £15 per week will be the deciding factor, there may be several hundred however for whom £250 per month would make a significant difference. So a smaller more focussed initiative may deliver the intended results, but that means setting aside those who lobby for groups rather than individuals in need and that is something this executive still lacks the maturity to do. The political philanthropy which passes for government in Northern Ireland may wish to believe that many thousands of small retailers will thrive on their generosity. I suggest however that many of the independent retailers lined up to argue for this relief will find that eventually their £15 will end up on the balance sheet of the retail distributors whose company name adorns their corner shop or garage forecourt.

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