Chancellor mulls online sales tax to rescue bricks-and-mortar

4227
Rishi Sunak online sales tax Covid-19
The Treasury is also considering plans to eradicate business rates and replace them with a “capital values tax”
// Chancellor Rishi Sunak considering an online sales tax
// There may be a 2% levy on online sales
// The mulling comes after high street retailers saw Covid-19 affect trading

Chancellor Rishi Sunak has reportedly said he is considering an online sales tax to raise £2 billion a year in an effort to “save” the UK high street in the wake of Covid-19.

The government may impose a two per cent levy on online sales as well as a charge for online deliveries.

Sunak aims for an online tax to generate “sustainable and meaningful revenue source for the government,” The Times reported.


READ MORE:


Last week, the Treasury issued a call for evidence around business rates, amid long running and industry-wide concerns that the commercial property tax penalised bricks-and-mortar retailers as online-only rivals do not operate from such “high value” properties.

It also said that the coronavirus crisis “has had a significant impact on how business is done” and that the government must act to make sure that “the tax system raises sufficient revenue”.

Moreover, the Treasury is also considering plans to eradicate business rates and replace them with a “capital values tax”.

This would mean the tax would be paid by the owner of the property rather than the business leasing it.

Separately, retailers have been further affected by the face coverings rule becoming mandatory last week.

The number of shoppers declined by 0.2 per cent on Friday compared to the previous Friday.

Despite the easing of lockdown, retail footfall on Friday was still down between 36 per cent and 41 per cent across the UK compared to the same period last year, according to Springboard.

Click here to sign up to Retail Gazette’s free daily email newsletter

12 COMMENTS

  1. Yet another bonkers idea!
    Why does this country always feel that it knows best. The shift online has long been and will continue to be the growing trend globally of how people will shop. More so with a wave after wave of various pandemics.
    This just highlights that a British government will always look for for an easy source of revenue rather than come up with a decent strategy of their own to grow and stabilise the economy.
    This current lockdown just goes to show how fragile a lot of businesses are, unable to survive 14 weeks even with their wage bill covered.
    So scraping away some of the profits from online businesses that also have overheads to prop up a failing high-street that needs to take responsibility for the success and viability for themselves rather than running off weeping to the government will not help.
    As the old proverb goes: Give a man a fish and you feed him for a day, teach a man how to fish and he feeds himself for a lifetime.

  2. Have advocated 22% VAT or similar differential on internet sales for over 10 years now to level the playing field for bricks and mortar retailing. Delighted to see this may yet happen.

    • Level the playing field?? It’s a broken business model – people are actively choosing to shop online and are actively choosing to stop shopping in city centres and retail outlets.

      Taxing innovative businesses that have built their business around consumer demand, to save businesses which haven’t adapted, is absolutely absurd. Nonsensical.

      Whilst we’re at it, why don’t we tax Zoom, Skype & Microsoft Teams so that we can save Commercial Real Estate firms, because those innovative companies are enabling people to work from home which is bad for the real estate firms?

      The world evolves. Businesses must keep up or they must die. Govt. should not interfere.

    • Level the playing field?? It’s a broken business model – people are actively choosing to shop online and are actively choosing to stop shopping in city centres and retail outlets.

      Taxing innovative businesses that have built their business around consumer demand, to save businesses which haven’t adapted, is absolutely absurd. Nonsensical.

      Whilst we’re at it, why don’t we tax Zoom, Skype & Microsoft Teams so that we can save Commercial Real Estate firms, because those innovative companies are enabling people to work from home which is bad for the real estate firms?

      The world evolves. Businesses must keep up or they must die. Govt. should not interfere.

  3. Tax tax tax. Need to be more creative around the future of shopping.
    Bland department stores selling the same over-priced clobber in every town.
    Stop building out of town shopping centres if you want a High Street.
    Alternatively accept changing behaviours and re-invent town centres with more housing rather than shops and better lifestyle facilities which is where purchasing has been shifting towards.
    The same applies to office space not being needed now we have seen we can all work from home easily. What will they tax to make up for that?
    And how will they crack down on tax avoidance by large international companies?

  4. Government needs to understand that people don’t want to wait in queues, and even after waiting not sure if they will actually get the item. So obviously until the social distancing is there people will opt online as it saves time as well reduce the risk, which obviously government wants on on hand.
    Really fail to understand this, government want people to avoid unnecessary crowding as well as wants people to go out.
    Wrong move by government.

  5. Rather than increasing the tax on online sales they should be reducing the unfair burden on retail and office businesses by reducing business rates.
    The difference in revenue can be made up by a modest increase in homeowner rates, especially at the upper end of property values.
    For example, a multi-million pound mansion in London is in band H and carries a council tax of under 3,500 pounds per year. A similar value home in the USA would be taxed at 2% of value, perhaps 50,000 pounds per year.
    Remember of course that it’s easier to tax businesses as they don’t vote!

  6. not fair to people who only shop online because they cannot go out due to disabilities. we want to help the high st. but some people cannot go out due to disabilities. not fair.

  7. Actually by raising the online tax, it increase the entry barrier of the retail business, as there are many sole traders can’t even afford to rent a store, and selling online is the best way to do so, and you wanna get reducing their margin simply because they can’t afford to rent in the high street. Not to mention it just completely ignore the jobs generated by the online shopping.

  8. How ridiculous. All this will achieve is to penalise the housebound who depend on online shopping and interfere with lives of those who use online so they can spend more time doing nice things with their families at the weekends instead of hauling the whole family to retail stores. Could it even push online shopping overseas? Get a grip!

  9. Increasing taxes for online sales isn’t going erase the fear of shopping the high street, nor will it reduce social distancing constraints making high street shopping impractical. This is just going to hurt all those small businesses who are currently operating on tighter margins as they do not have the economies of scale to drive down wholesale prices, and will ultimately result in putting more businesses to the wall and can only end with higher costs to the consumer.

    Also, lets not mention that all those brick and mortar business owners who have pivoted to eCommerce in response to the pandemic in a bid to recover lost revenue?

    That sales tax will be kicking them whilst their down.

LEAVE A REPLY

Please enter your comment!
Please enter your name here