Supermarket levy plan in Scottish budget

Finance Secretary John Swinney has announced a new levy on major retailers.

The measure is part of the Scottish government's spending plans for the coming year.

Mr Swinney also confirmed a five-year freeze in council tax and said public sector pay would be frozen for the next year.

The opposition at Holyrood accused Mr Swinney of moving the effect of UK-wide cuts to Scotland's local authorities.

The plans included a boost to government-backed capital investment, intended to support economic recovery.

More than £750m will be transferred from resource expenditure into the capital investment programme.

Mr Swinney told MSPs: "This spending review contains tough choices because of the cuts from Westminster that go too far, too fast.

"We have had to restrict pay costs, reluctantly implement pensions increases on public sector staff, and maximise the income gained from asset sales."

Retailer tax

Mr Swinney stood by the Scottish government's commitment to freeze council tax levels for five years, and said he would provide funding to cover the freeze.

Part of the additional revenue being raised by the Scottish government will come from a levy on major retailers supplying alcohol and tobacco products.

During the last parliament, a proposal to introduce a wider measure which came to be known as the "Tesco tax" was voted down by opposition MSPs.

CBI Scotland's director, Iain McMillan, said he was worried about the plan.

He added: "The re-emergence of the retail levy was absent from the SNP manifesto and we consider its re-appearance a fundamental breach of the commitment to poundage rate parity."

Labour's finance spokesman, Richard Baker, accused the SNP of passing on the pain to local authorities.

He said education and social work budgets would be particularly badly hit.

"The Scottish government has passed the buck for the decisions they have made today," he said.

"There has been no rabbit out of the hat from Mr Swinney and there is a great deal of pain for key parts of our economy and many people in our society in this budget."

Economic stability

The Conservatives' finance spokesman Gavin Brown accused the SNP of not putting the economy at the heart of its budget.

He said: "This government ought to be judged by what it does as opposed to just what it says.

The so-called "Tesco tax" is back on the government's agenda

"They have said the economy is the most important thing but the rhetoric and the reality do not match together."

The leader of the Scottish Liberal Democrats, Willie Rennie, said Mr Swinney needed to concede that the UK government was contributing to the stability in the Scottish economy.

"This is a partnership between two governments," he said.

"To present it in the way he does in black and white terms, that the UK is only responsible for bad things and Scotland is only responsible for good things, I think demeans him and it demeans his office."

There has been mixed reaction from businesses to the measures outlined by Mr Swinney.

The Scottish Chambers of Commerce welcomed the emphasis on capital spending, but was unhappy about the levy on alcohol and tobacco retailers.

The Scottish Retail Consortium said the levy was "illogical and discriminatory", and ignored other parts of the supply chain.

MSPs are expected to vote on the spending proposals for 2012-13 in the spring.

But with a majority in parliament, Mr Swinney's plans are expected to be unopposed.