Government Announces Consultation For Online Sales Tax

Chancellor Rishi Sunak has announced a consultation on a new online sales tax in his autumn budget. The so called ‘Amazon tax’ is intended to address the imbalance between levies on high street businesses and the burgeoning online retail sector. In a statement, ministers said they “continue to explore the arguments for and against” the policy.

In 2019/20, £7.9bn was raised through retail business rates, and just over 5% of this amount was received from the ecommerce sector. This was despite the likes of Amazon, Asos, and eBay making huge profits and online sales now accounting for a quarter of all sales in the UK.

The government said they would publish the consultation ‘shortly’, without committing to a specific timeframe.

Some retailers criticised the Chancellor’s failure to bring the online sales tax into effect straight away. Speaking to The Guardian, Gary Grant, chair of The Entertainer, the toyshop chain, said that physical stores were at a disadvantage because they had to pay business rates, while online retailers are still not facing an equivalent tax.

Sainsburys boss Kevin O’Byrne was also unhappy at the lack of a firm decision. He described business rates as ‘an outdated tax that is no longer fit for purpose,’ and called for reforms to level the playing field.

High street retailers have already taken a huge battering from the lockdowns, with many household names going out of business. At the same time, online shopping has thrived. It has been suggested that a new tax for digital sellers could be used to reduce business rates for those with bricks and mortar stores.

However, Which reports that the British Retail Consortium have opposed the plans, which they say will unfairly penalise the many retailers who have both high street stores and an internet based service. Ultimately, whatever the outcome, it is likely that increased costs for UK retailers may end up being passed on to the consumer.

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