A NEW tax that could see 700 Southampton firms pay anything up to £190,000 extra a year has been ruled out by city leaders.

A levy of two per cent on the rateable value of the business, the Supplementary Business Rate (SBR) would be retained by the local authority to deliver major local projects.

It was intended to deliver control over spending to local authorities who have to pass on all business rates raised to central Government.

But setting out their business-friendly credentials ahead of an anticipated 2010 General Election, Conservative Parliamentary candidates and city councillors Jeremy Moulton and Royston Smith said they would “have no truck with it”.

Already city businesses are weighing up a proposal for a Southampton Business Improve-ment District.

If the idea gets the go-ahead at a vote due to finish on Thursday, around 400 firms in the city centre will pay 1.2 per cent extra on top of their rates in return for improved services.

As well as companies, the SBR would have hit high street stores, pubs and restaurants, local schools, colleges and the city’s two universities.

Jeremy Moulton and Royston Smith, who hold the finance and economic development portfolios in the city council Cabinet, claimed the tax would hit Southampton’s flagging local economy, threatening businesses and jobs in the city.

Cllr Smith said: “This is precisely the wrong time to be raising taxes on businesses, who are already under tremendous pressure from the recession.”

Cllr Moulton added: “This is another attempt by Gordon Brown to hike taxes by stealth.

“The supplementary business rate is a bad policy and we will have no truck with it in Southampton.”