Independent shops ‘open’ to idea of online sales tax

Independent retailers say they are “open to the possibility” of introducing an online sales tax to finance a big cut in business rates.

The British Independent Retailers Association (Bira) is one of the signatories of a letter sent to chancellor Rishi Sunak as part of The Retail Jobs Alliance, a new lobby group of UK retailers.

Crucially, members of The Retail Jobs Alliance include such big players as supermarkets Tesco, Sainsbury, Co-op and Morrison, book chain Waterstones and takeaway baker Greggs. Between them, its members employ more than 1m people – or one-third of the entire industry’s workforce, according to Sky News, which broke the story.

>See also: Small businesses may have to pay 2% online sales tax

Tesco has previously suggested that a 1 per cent online sales tax could fund a 20 per cent cut in business rates for physical stores.

The sector’s biggest lobbyist The British Retail Consortium is unable to reach a common position over an internet shopping tax because its wide membership includes Amazon, while other members including John Lewis, Currys and Next have long been opposed to an online levy.

Andrew Goodacre, chief executive of Bira, told the Financial Times that digital sales taxes were “a very divisive issue”.

“It’s really hard to find a position that pleases all of your membership. But according to our surveys, the majority of members are in favour of an online sales tax that taxes big companies like Amazon more than it does them,” he told the newspaper.

>See also: Rishi Sunak eyeing online sales tax for the spring

Independent retailers have long complained that business rates, which are calculated on historic market rents, are an outmoded, cumbersome and outmoded way to raise money. Out-of-town online distribution centres pay far lower business rates per square metre than struggling high-street businesses.

In a normal year, the tax raises around £25bn in England, with devolved administrations in Scotland, Wales and Northern Ireland operating slightly different systems.

In February, the Treasury launched a consultation on the merits of an online sales tax in the wake of a business rates review that it claimed would save companies £7bn. The Treasury consultation closes on 22 May.

“Whilst we’ve made no decision on whether to introduce such a tax, it’s right that, given the growing consumer trend to shop online, we work with stakeholders to assess the appropriate taxation of the retail sector,” Lucy Frazer, financial secretary to the Treasury, said at the time.

More on online sales tax

Government mulls extending 2% online sales tax to all small businesses



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