Proposals to tax large supermarkets have been welcomed with caution by the Craft Bakers’ Association (CBA). 

The response comes after a group of local councils asked the government for new powers to tax large supermarkets to ensure that shoppers’ spending ‘re-circulates’ in local communities.

Derby City Council has called for the tax, which is supported by 19 other local councils. The so-called ‘Tesco-Tax’ could raise up to £400m a year.

Mike Holling, executive director at the Craft Bakers’ Association, said: “We welcome it with caution. If the funds truly are recouped and put into the high street, then we should welcome that. Anything that will benefit the high street businesses and will make it more vibrant we welcome. But let’s see what the details are first.”

A similar tax already operates in Northern Ireland and Scotland.

Submitted under the Sustainable Communities Act, the council’s report says supermarkets brought in some benefits, but had an overall detrimental impact on the sustainability of local communities.

The report stated: “Research has shown that 95% of all the money spent in any large supermarket leaves the local economy for good, compared to just 50% from local independent retailers; this levy is a modest attempt to ensure more of that money re-circulates within and continues to contribute to local jobs and local trade.”

Retailers are expected to strongly oppose the levy, arguing that they are already taxed enough. 

A similar tax imposed by the Scottish government on larger shops selling alcohol and tobacco is set to end next year. The aim of the scheme was to make them contribute to public health measures.