Cut business rates and scrap plans for an online sales tax

30 Jul

Over the last few days, executives from several high street and online retailershave been publicly locking horns over plans to introduce an online sales tax.


Bosses from the likes of Ocado and Shop Direct have written a letter to the Chancellor, George Osborne, opposing the move which is being championed bystores such as Morrisons, amongst others.


The letter reads: “Online is a rare and precious success story for the UK and one that we should take pride in.  At a time when SMEs in these sectors are attempting to deliver innovation, growth and jobs they should not be choked off by unintended consequences of an unfair tax.  There is no logic to penalising companies that provide consumers the convenience, efficiency and value online shopping offers.”


The high street retailers are arguing that an online retail sales tax should be charged on online shoppers (on top of the existing VAT, of course).  They insist that they cannot keep up with online retailers because they are having to use huge swathes of their profits to pay astronomical business rates as they havechains of stores across the country.  As such, they say, they are at a competitive disadvantage because the ‘onliners’ just have a few distribution and call centres to manage.


Business rates – which, of course, are nothing to do with corporation tax, an issue which has gripped the media of late – are indeed steadily increasing in the UK (whereas corporation tax has been cut).  Business rates stifling UK retail; they are one of the reasons why so many British town centres are increasingly looking like ghost towns.


To my mind, the retailers are right to highlight this issue of business rates, but they should not be campaigning for the introduction of another sales tax andshould instead be channelling their energies into campaigning for business rates to be reduced.  That, I’m convinced, would be a better way to make the UK retail sector a more competitive place to do business.


A reduction in business rates would help to level the playing field – which iswhat the high street firms are seeking – and UK consumers, who are already taxed to the hilt, wouldn’t have to face yet another tax.  Taxing British shoppers even more is not the answer to the UK retail sector’s woes.  Indeed, I suspect it will have quite the opposite effect.




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