The Government has dismissed calls for a ‘Tesco Tax’ that would have meant supermarkets and other big retailers would pay extra in business rates.

Eric Pickles, Secretary of State for Communities and Local Government, has written to the leader of Derby Council - who led calls for the tax in July – blasting the proposal as “lazy”.

In the letter, Pickles said such a tax would “ultimately push up the price of food and the cost of living, hitting low-income families the hardest”.

He maintained a tax would “invariably reduce investment in new and existing stores and hit jobs”.

Pickles said: “The Coalition Government does not support these calls for higher taxation. Larger premises already pay higher business rates, as a business rate bill is directly related to the Rateable Value of the premises.

“In any area, bigger premises have a bigger Rateable Value; moreover, larger firms are not eligible for many of the various reliefs and also pay a higher multiplier.

“Supermarkets should certainly act with social responsibility, but equally, we should also recognise they play an important role in our society and free market in providing convenient, accessible and competitively priced food.”

He added: “Certainly high streets face challenges, but this is as much about the way that the internet is  changing the way we shop in the 21st Century: and it is as challenging for supermarkets’ old business models, as much as it is for small firms.

“In that context, your proposal is sadly an all-too predictable siren call from some parts of local government: namely, the solution to every policy issue seems to be how to impose new taxes. This is a lazy way of thinking.”

Business rates Expert Paul Turner-Mitchell said: “This proposal I have no doubt would have been used simply to plug council budget shortfalls. It was anti-business. Eric Pickles was right to say it was lazy thinking.”

Pickles sent the letter after a “number” of town halls initiated “legal moves” to impose additional business rates on supermarkets and large shops through the Sustainable Communities Act.

Derby’s proposal was backed by 19 other local authorities in England. Their aim was to help spending in supermarkets “recirculate” in local communities. The extra business rates levy would have hit any large store with a rateable value of more than £500,000.