// New analysis reveals that high street retailers are paying 755% more in business rates than their digital competitors
// In a joint letter to the Chancellor earlier this month, supermarket giants including Morrisons and Co-op, called for a “meaningful cut” to business rates
According to new analysis, traditional high street retailers are paying 755% more in business rates than their online rivals.
Real estate advisory firm Altus Group says that for every £100 earned by large retailers in Great Britain (excluding non-store sales and fuel) £2.91 is owed to local councils in business rates.
While for large online-only retailers, total business rates per £100 in sales are just 34p.
- Retail giants team up to demand business rates cut
- M&S warns Rishi Sunak an online sales tax will ‘damage’ shops and high streets
The figures come after Sainsbury’s and Marks and Spencer execs have voiced differing opinions over the prospect of an online sales tax.
A revenue-based online sales tax of one per cent on the online sale of goods to UK customers above an allowance of £2m could raise around £1bn a year, Altus Group analysis found.
“Ring fencing that revenue and targeting it to actually cut rates for retail, leisure and hospitality premises could lead to a reduction in rates of about nine per cent,” Robert Hayton, UK president at Altus Group, stated.
“No solution will be easy nor perfect but, if left unchecked, could lead to the substantial extinction of the high street and the erosion of local communities,” he said.
The new analysis comes just days after the government closed a consultation into the possible introduction of a digital sales tax as a way to pay for a reduction in business rates.
The world’s tax authorities have been trying for years to decide how to handle large online-only companies, such as Amazon, who officially report their British retail sales in low-tax jurisdictions.
Kevin O’Byrne, the chief financial officer at Sainsbury’s, said government should go ahead with the tax and that high business rates for shops were “destroying high streets up and down the country,” The Guardian reported last week.
But his counterpart at Marks & Spencer, Eoin Tonge wrote to chancellor Rishi Sunak, warning that an online sales tax would do more harm than good for the high street.
Tonge said: “Far from levelling up, an online sales tax would lock us down. It would make it even harder for the retailers the consultation is purportedly trying to help to invest in the digital transformation required to survive and grow in the modern, digital era.
“The solution we need is practical, pragmatic reform of business rates and better taxing of global players to ensure everyone pays their fair share.”
Almost 90% of retailers back an online sales tax, according to a survey by property specialist Colliers.