Rishi Sunak mulls online sales tax for e-commerce retailers
Chancellor Rishi Sunak is mulling a new tax on online retail sales to ease pressure on the struggling UK high street.
In a call for evidence published last week the Treasury sought industry views on a potential online sales tax for e-commerce retailers to help physical stores compete.
The tax, which would exist alongside business rates for bricks-and-mortar retailers, could “provide a sustainable and meaningful revenue source for the government”, the consultation document said.
The government said the tax could be levied on revenues that businesses generate from online sales to UK customers, focused on sales in direct competition with those carried out in physical stores.
Online sales surged during the coronavirus lockdown as non-essential stores closed, accelerating the shift to internet shopping.
Online shopping in June was 53.6 per cent higher than in February – just before the pandemic hit the UK.
“Some commentators argue that the business rates system creates a distortion within the retail sector, favouring online retailers that can operate without the high-value properties that are a feature of more traditional retail,” the document said.
However it added that some believe the tax “would penalise more efficient or innovative businesses”.
The government is considering two approaches to the potential online sales tax, according to The Times.
One option is a two per cent levy on goods sold online, which would raise about £2bn a year. The other is a charge on deliveries as part of a bid to cut emissions and congestion.
However, there are concerns that both measures could raise prices for consumers.
The government is also seeking opinions on a potential capital values tax to replace the business rates system, in a move that would shift the burden from the tenant to the landlord.