Written by: Keith Tully
Published: 21st February 2019
Members of parliament have proposed that an online sales tax be levied against internet retailers in order to provide support for their high street counterparts.
High proportions of high street retailers across the UK have been struggling to balance their books and stay in business in recent quarters, with a variety of factors combining to hand a competitive advantage to online retailers.
A particular issue for bricks and mortar retailers is that they are obliged to pay business rates linked to their commercial premises, while their online competitors generally do not face that problem or at least not to the same extent.
A wide-ranging MPs report on the issue of competitiveness in the retail sector, called ‘High streets and town centres in 2030’, says that action should be taken by the government to “level the playing field” for high street operators.
It was pointed out in the report that the ecommerce giant Amazon pays around 0.7 per cent of its UK turnover as business rates, whereas for high street stores across the country the figure is typically somewhere between 1.5 per cent and 6.5 per cent.
Having investigated trends within town centres, MPs said in their report that the impacts of the challenges faced within the retail sector has been “stark” in many parts of the country.
Many areas have seen their high streets become increasingly empty and lacking in footfall as more and more retail businesses have gone into administration and units have been left persistently unoccupied.
The warning from the MPs on the Housing, Communities and Local Government Committee is that, unless serious action is taken to support UK high streets then “some formerly thriving shopping areas are likely to become ghost towns”.
The Treasury has previously ruled out the idea of introducing online sales taxes on the basis of worries that it would have too much of an impact on consumers.
Helen Dickinson, chief executive of the British Retail Consortium, has raised concerns about the idea of introducing a tax on online sales but has expressed clear support for changes to the current business rates system.
“Without a full and urgent review of business rates and business taxes, the government is sleepwalking into the demise of many of our local communities up and down the country,” she said in a statement on the issue.