4 August 2014

Long gone is the era of the corner shop. When I was growing up, they were a big part of the community, but now there are big chain supermarkets, and smaller versions of those supermarkets popping up to fill the gap left by the traditional newsagent. I read recently that a group of local councils was lobbying to tax larger supermarkets a levy as a means to ensure more money recirculated in the community. Their research has suggested that about 95% of money spent in large supermarkets leaves the local area for good. In independent retailers, the figure is much lower.

tescotaxHowever, whilst I agree that this is a problem, I think the idea the councils have come up with (nicknamed “Tesco tax”) is probably a little unfair on the supermarkets; and actually what you want to be doing is trying to tackle the wider issue of stores with foreign parent companies washing profit overseas. It’s not just the fact that it’s not reaching the local community. It’s not reaching the community at all.

It’s a much wider problem so simply levying supermarkets isn’t going to solve it. The way to solve the problem is to say that if you earn a pound in the UK, you pay tax on that. It doesn’t matter where that pound is going to end up; you pay tax on that money. And instead of the overcomplicated, disproportionate tax rates we currently, have, everybody to earn a pound in the UK would pay a flat rate of tax.

I’m willing to bet that suddenly, almost overnight, you would have all the money that went offshore, coming back onshore again. There would be no scams, no tax evasion. Britain is an incredible place to make money but the issue is that, currently, it’s easier for a foreign organisation to make money in the UK than it is for a British business. Let’s say, for example, an American business buys a UK business. They can justify sending a big management charge back to the parent business. That significantly reduces the profit, which reduces the taxable amount. This is a massive problem and you cannot deal with this locally. Upping the amount for large supermarkets isn’t going to work, it’s totally irrelevant.

So, is there a better way to help support small business than levying big business? Well, I think the only way you can really do it is emotionally, if the whole of the country rallies together and says, “Stop buying from foreign companies when you’ve got a British company you can choose.” The problem is, people are always going to be driven by price and service so if they give a better service because they make more money, then they become very slick operators. It becomes very difficult to incentivise people to look at the benefits of buying elsewhere.

Ultimately though, if we buy British first, choosing independent businesses where we can, we will be making a collective difference. It might not move mountains, but, hey, every little helps…

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