New UK retail lobby group is ‘open to’ online sales tax

A new lobby group of UK retailers has said it is ‘open to the possibility’ of introducing a tax on online sales to fund a steep drop in business prices, highlighting deep divisions in the industry over how to rebalancing the tax burden between physical stores and the Internet.

The Retail Jobs Alliance, which was unveiled on Tuesday and says it is a temporary one-issue group, includes supermarket groups Tesco, J Sainsbury, Coop and Wm Morrison; DIY Specialist Kingfisher; the Waterstones bookshop and the Greggs takeaway chain. Together, the members employ more than 1 million people.

“We will advocate for an overall business rate reduction for all retail businesses and are open to the possibility of funding it through the introduction of a new online sales tax,” the group said in a statement. letter to Chancellor Rishi Sunak.

The campaign is also supported by Usdaw, the store workers’ union, and two organizations representing small independent retailers.

Almost all retailers who operate stores are of the opinion that business rates, a property tax based on annual rental costs, are too burdensome and are not adjusted often enough to reflect changes in the rental market.

But there are significant differences of opinion over whether an online sales tax is the way to fund a reduction in the burden of business tariffs.

A group of online-only retailers set up in 2021, the UK Digital Business Association, opposed such a tax. Its members include Ocado, electrical appliance retailer AO, fashion groups Asos and Boohoo, and health and beauty retailer THG.

Tesco has previously suggested a 1% online sales tax could fund a 20% reduction in shopping rates for physical stores. Others, like Currys and Frasers, have previously said more frequent reassessments and other adjustments would better align corporate rates with economic reality.

The diversity of views has left the British Retail Consortium, which traditionally speaks for the industry on public policy issues, in a difficult position.

“The BRC’s breadth of membership means that, for very good reasons, it is unable to take a position on an online sales tax,” said a spokesperson for the Retail Jobs Alliance, which has added that some of those who had signed the letter were members of the BRC. .

Andrew Goodacre, chief executive of the British Independent Retailers Association and signatory to the letter, said online sales taxes were “a very controversial issue”.

“It’s really hard to find a position that appeals to all of your members. But according to our polls, the majority of members support a tax on online sales that taxes big companies like Amazon more than itself.”

Some retail executives say it has become much more difficult for the BRC to come to a unified position on online sales tax since Amazon, the UK’s largest online retailer, became member.

But longtime BRC members such as Currys, John Lewis and Next are also longtime opponents of online levies on the grounds that they will only increase the overall tax burden on retailers or be passed on to consumers. DBA members such as Asos, Boohoo and AO are also members of the BRC.

The BRC declined to comment, but acknowledged that it was working with its members to develop its response to the government consultation on online sales taxes. He was highly critical of the current corporate pricing system.

The Treasury consultation ends on May 22. An earlier report on business rates concluded that while more frequent reassessments and other adjustments could reduce the burden on retailers, it saw “little point in tearing up the system and starting over.”

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

During the Covid-19 pandemic, retail and hospitality businesses received substantial business rate relief and small retailers continue to enjoy a 50% discount until April this year. next.

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David A. Albanese