Fears that tax proposal could force Sainsbury’s to rethink Kelso store

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SAINSBURY’S this week said it would “could not confirm” it was ditching plans for a store in Kelso.

The food giant’s boss Justin King earlier this week said the company’s expansion in Scotland was threatened by the so-called ‘supermarket levy’ proposed by the Scottish Government.

On Tuesday a spokesperson for the supermarket said: “We cannot confirm we’re pulling out of Kelso. Scotland has been a key part of our growth plans in recent years.

“We feel this is an extraordinary tax which will penalise one of the few sectors that continues to grow and create jobs during the economic downturn. It represents a significant and unbudgeted financial burden.”

In the draft 2011-12 Scottish budget finance minister John Swinney plans to increase rates on stores with a rateable value of more than £750,000, a tax which could raise £30million a year.

Sainsbury’s says the rates bill for its biggest stores could go up by more than half.

And chief executive Mr King is quoted late last week as saying: “I cannot stand by those plans (for new stores in Scotland) if the economics of opening those stores is materially changed.

“We have to prioritise where we spend our money, what delivers the best returns. We are not talking about a marginal tax here. It’s massive. It will increase our tax bill in Scotland by 50 per cent if it goes through.”

Roxburgh & Berwickshire MSP John Lamont said: “At a time when many retailers are facing the most difficult trading conditions in years, it would be foolish to hammer them with another tax rise.

“Residents in Kelso have been waiting for years for the arrival of this Sainsbury’s store and the company have made clear that this tax rise will put the store at risk.

“My Conservative colleagues and I will oppose this proposed new tax in the Scottish Parliament. I hope MSPs from other parties will also vote against this damaging and ill-judged tax hike.”

Kelso provost Fiona Scott said: “At this time (Monday) I have been, reliably informed that Sainsbury’s have invested too much time and money in Kelso to pull out now and that they plan to open the new supermarket in the summer. I sincerely hope this proves to be true, because the increased employment opportunities which a business of this size promises are of considerable importance to the town.

“There is national widespread concern that our current economic climate poses a real threat to many people’s livelihoods and people in Kelso share that anxiety The jobs which Sainsbury’s have told us that they will bring to Kelso will be valuable to the community.

“Generally within the town there is a high expectation that Sainbury’s will not let the people of Kelso down and that the company will honour its planned intention to develop the Pinnaclehill site.”

Lib Dem Scottish parliamentary candidate for the area, Euan Robson, has written to Mr King asking for reassurance that the Kelso store is going ahead.

The supermarket fought for three years to get the go-ahead on the old Keltek factory at Pinnaclehill industrial estate on the edge of the town – and work is underway – while rivals Tesco had battled for a store at nearby Spylaw.