The Scottish government is again being urged to reconsider its proposed levy on large retailers, as a report by the Scottish Parliament’s Finance Committee questions how the policy will support town centre retailing.

The Scottish Retail Consortium (SRC) is calling on Finance Secretary John Swinney to scrap the planned business rates hike for stores with a rateable value of more than £750,000.

Sainbury’s boss Justin King has warned that the grocer would rethink its expansion plans in Scotland if the Scottish government pushes ahead with the tax increase.

Other major retailers across Scotland including Tesco, Marks & Spencer and John Lewis have protested against the proposed business rate hike, forming campaign groupCompetitive Scotland.

Scottish Retail Consortium director Fiona Moriarty, said: “The Finance Committee’s report has rightly identified the key contradiction at the heart of John Swinney’s proposal. He talks of support for economic growth, but proposes financial penalties for success. Here is a cross-party group of MSPs who are tasked with scrutinising the budget and they’re telling John Swinney his thinking is flawed. He must listen to them.

“We welcome the cross party consensus that this tax hike is damaging to Scotland, unfair and will hinder investment. MSPs are right to ask John Swinney to think again. If the Government wants to support town centres, including small shops, it must recognise the importance of large retailers who attract the necessary volume of customers.”

She added that the tax would “hit large retailers of all types” and would result in fewer large retail stores opening in the future, and fewer existing stores being expanded. “That means a reduction in job creation, both by the major retailers and businesses which support them, such as in construction and logistics,” said Moriarty. “Far from encouraging businesses to expand in Scotland, it gives them every reason to look elsewhere.