A parliamentary inquiry has led to the issue of a proposal for an online sales tax to help shore up the high street. The aim is to use the mooted tax to reduce business rates on retail premises and seems to be largely directed at Amazon and other large scale online businesses which currently pay much lower rates as a percentage of their sales than do those operating physical stores.
The report says that the government should conduct an assessment of remedies proposed to the committee over the course of the inquiry, including a sales tax, an increase in value-added tax, and ‘green taxes’ on deliveries and packaging. It also stated that high street retailers have to accept the need to change and adapt and try to offer what online isn’t able to, focusing on personal interactions such as experiential retail.
General commentary around this proposal has been mixed. Most agree that the high streets of old are simply not attracting shoppers, are unlikely to return to their former popularity without major investment, and do not expect that a reduction in rates payable on retail store premises will have a particularly great impact. However, most retailers are keen to see Amazon and other large off-shore headquartered online retailers pay the correct amount of tax in each the countries they sell in to, pro-rata to the value of the sales made, which would be achievable via a sales tax. This would then enable local retailers – whether bricks and mortar, pureplay online or multichannel – who do collect and remit VAT, to compete on a fair basis.
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