M&S warns Rishi Sunak’s online sales tax will punish the high street
UK retailer Marks and Spencer (MKS.L) has warned Chancellor Rishi Sunak that an online sales tax will do more harm than good to shops and Britain’s high street.
It comes after the government launched a consultation on the possibilities of an online sales tax in February in a bid to ease the tax burden on the high street.
The proceeds will go to fund a reduction in commercial rates for stores, the Treasury said. The consultation must close on Friday 20 May.
Professional rates are paid on all commercial properties and are calculated based on the value of the property and the rent paid.
However, the chain believes a new online tax would “punish” the retailers it plans to support and leave them with less money to invest in high-street stores.
The chain confirmed to Yahoo Finance UK that Eoin Tonge, chief financial officer of M&S, wrote a letter to Sunak following the original BBC reports.
Tonge said in the letter: “The introduction of an additional tax on the already overburdened retail trade will simply mean that retailers will cut their fabric accordingly.
“This streamlining will always start with the least profitable parts of a business, which in the case of multi-channel retailers will most often be high street stores.
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He added that the move would not benefit department stores, but rather cause them “damage”.
“Therefore, it’s likely that, far from helping the high street, an online sales tax will further damage stores and our high streets, especially in areas that need new investment to bring them back to life.”
The Treasury has reportedly not yet decided whether it plans to introduce the tax.
The Chancellor promised the consultation during the budget in October last year after businesses raised concerns about a possible fiscal imbalance between in-store and online retailers.
According to a survey by real estate specialist Colliers, 89% of traders are in favor of an online sales tax.
A separate report by the British Retail Consortium highlighted that 83% of retailers said it is ‘likely’, ‘very likely’ or ‘certain’ they will close stores if the commercial tariff charge is not reduced.
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