A group of 20 local councils, lead by Derby City Council, has called for the right to impose levies on large supermarkets, which could earn them an estimated £2m a year.
The system is similar to one already in place in Scotland and Northern Ireland, and is based on the provisions of the Sustainable Communities Act (SCA), which allows communities and councils to suggest solutions to local problems.
The proposal claims that 95% of money spent in large supermarkets leaves the local economy for good, compared with 50% from local independent retailers.
Councillor Ranjit Banwait, leader of Derby City Council said: “This levy is already benefitting communities in Scotland and Northern Ireland. The revenue that we’ll be able to generate will mean that we can improve local communities, support local business and improve public services.”
The new tax would theoretically ensure that more money stays locally, by imposing an extra business levy of up to 8.5% on large retailers with rateable values in excess of £500,000.
However, the Department for Communities and Local Government (DCLG) has stated that the idea has already been ruled out in a previous round of SCA proposals, stating "there are much better ways to support small shops."