Chancellor Philip Hammond has hinted at introducing tax changes to ensure high street retailers are able to compete with online rivals.
Speaking to Sky News, his comments come in the immediate aftermath of House of Fraser being rescued by controversial billionaire Mike Ashley in a last-ditch rescue deal.
Online retailers, especially big firms such as Amazon, often pay a much smaller amount in business rates when compared to their soaring sales figures.
- Amazon pays just £38m in business rates despite making £9bn in sales
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- West End retailers call for online tax to address business rates inequality
- BRC calls for freeze on business rates “burden” until 2021
- Tesco CEO Dave Lewis pins recent retail troubles to business rates
“We want to make sure that the high street remains resilient and that we also make sure that taxation is fair between businesses doing business the traditional way and those doing business online,” Hammond said.
The Chancellor also said that a change in the system “requires us to renegotiate international tax treaties because many of the big online businesses are international companies”.
He added: “The European Union has been talking about a tax on online platform businesses based on the value generated. That’s certainly something we’d be prepared to consider.”
Hammond has previously admitted that business rates were hitting the high street too hard, but he stopped short of making any immediate changes to the system.
Several high-profile retail leaders have criticised the current business rates regime and the lack of level playing field between bricks-and-mortar and online-only retailers.
Next chief executive and Tory peer Lord Simon Wolfson was the most recent to voice his concerns, telling ITV News recently that the commercial property tax needed to be updated to reflect major changes in retail triggered by online shopping.
Other leaders who have previously criticised the business rates regime or called for reform include Tesco chief executive Dave Lewis, Sainsbury’s chief executive Mike Coupe, The Entertainer chief executive Gary Grant, Argos chief executive John Rogers, and retail expert and TV personality Mary Portas.
The British Retail Consortium, New West End Company and Bank of England governor Mark Carney have also flagged the tax for damaging the retail industry.
House of Fraser was bought out of administration by Mike Ashley’s Sports Direct today and is the latest in a long line of well-known retailers to hit trouble.
Poundworld, Maplin and Toys R Us have all gone bust this year, with several other firms such as Mothercare, Carpetright and New Look undertaking store closures and job cuts through CVA schemes.