Prices in supermarkets will rise if the Scottish Government introduce a tax on large retailers, the leader of one of Scotland's main business organisations has warned.

David Lonsdale, Director of the Scottish Retail Consortium, spoke out after the Herald on Sunday revealed last weekend that SNP ministers were examining the levy as part of a potential Budget deal with the Scottish Greens.

He argued such a new levy would not be in keeping with the administration goal of creating a better deal for business and to promote economic growth.

John Swinney's minority government needs the support of some opposition MSPs in order to pass its annual budget with plans to be unveiled on December 4.

Patrick Harvie's and Lorna Slater's party have voted for every SNP budget since 2016 but were left angered when former First Minister Humza Yousaf collapsed the Bute House Agreement in April, ending the Greens role government.

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The SNP is reluctant to hold an election - which it may have to do if it can't get its financial plans passed - and support from its former coalition partners is seen as the best way of getting the budget through Holyrood.

Early discussions with businesses and public health charities have begun on the potential introduction of a supermarket tax which would see a levy imposed on some large retailers licensed to sell cigarettes and alcohol, with the money raised going to public health initiatives.

A recent report by the Fraser of Allander economic research institute for Alcohol Focus Scotland suggested that a levy on retailers with a licence to sell tobacco and alcohol set at 13p in the pound could raise £57 million a year.

"Exploratory discussions with business organisations and stakeholders have begun on considerations of the potential reintroduction of a Public Health Supplement," a Scottish Government spokesman told the Herald on Sunday.

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But David Lonsdale, director of the Scottish Retail Consortium, told The Herald any new levy on retailer would be an " unwarranted tax grab" on businesses, making them less competitive with retailers south of the Border and would push up prices for shoppers.

“It’s ten months since Scottish ministers in their last budget mooted the introduction of a business rate surtax on larger grocery stores in order to plug a gap in the public finances," said Mr Lonsdale.

"Despite the pledge in the New Deal For Business to involve commerce at the inception of policy development, the fact is we remain in the dark over their intentions and the scope of any potential new tax."

He added: “Any new Scotland-only and arbitrary levy would be an unwarranted tax grab and make stores here liable for the highest business rates in the UK. It would hinder retailers’ ability to keep down shop prices as the cost of operating a retail business is ultimately borne by customers. It would also open the door to other economic sectors being similarly targeted.”

Speaking in a Scottish Greens-led debate on budget priorities in Holyrood last Wednesday finance minister Ivan McKee acknowledged the work of the party in putting forward proposals for new taxes and criticised parties who did not suggest ideas.

"It was good to hear some constructive suggestions from opposition parties about what they would like to be included in the budget, but, frankly, we did not hear such suggestions from all parties, which was a bit of a shame and a missed opportunity," he said.

Senior SNP MSP Kenneth Gibson, convener of Holyrood's finance committee, a figure of key influence in his party and and in the Scottish Parliament, suggested taxes on supermarkets were worthy of examination.

"Although sympathetic delivery might not be easy, a public health supplement surcharge on large retailers that sell alcohol and cigarettes is already under discussion between Scottish ministers, sector representatives and public health organisations," he said.

"That proposal recognises the impact of alcohol and tobacco by directly targeting large retailers that benefit from selling such products. However, if tobacco and alcohol duties were devolved, it would better allow reinvestment in improving public health, and that should be pursued."

A Scottish Government spokeswoman said: “In line with the New Deal For Business, we are committed to early engagement to ensure that any impact of any proposals on business is fully understood.

“Exploratory discussions on the potential reintroduction of a Public Health Supplement with interested parties will ensure that considered and informed decisions can be made in advance of the 2025-26 budget.”

The new UK Government is to unveil its budget plans on October 30, while finance secretary Shona Robison will set out the Scottish Government's on 4 December.

Last month Ms Robison called on the Chancellor to deliver a budget which should focus on “investment and opportunity”, with more funding for public services, infrastructure and measures to eradicate child poverty.

Among her demands she called for Rachel Reeves to change the rules around borrowing to allow for greater investment in public infrastructure and services reverse the forecast cut to capital funding, abolish the two child limit and deliver an "essentials guarantee" providing basic necessities for those who need them most.