Online sales tax would mean 21 new taxes since 2000

Online sales tax would mean 21 new taxes since 2000

Announcements in today’s budget mean UK could get its 21st new tax since the year 2000, though the government goes ahead with a proposal to introduce an online sales tax.

Fifteen new taxes have been introduced since 2000. Two of them were one-time levies (the tax on bank salaries and the levy on loans), but the others are still in place. Two other taxes will occur next year (tax on plastic packaging and tax on health and social services). Three others should be legislated in the coming months (the tax on building security, the tax on real estate developers and the tax on economic crime). An online sales tax is now to be consulted.

In the meantime, no taxes have been abolished during this period.

This only includes taxes introduced by the UK government. If Scottish and Welsh taxes were included it would add at least four additional taxes in total.

John Cullinane, director of public policy at the Chartered Institute of Taxation, said:

“There is a powerful lobby pushing for a new tax specifically on online sales, and it is reasonable for the government to consult on this.

“However, we encourage the government to be cautious in this area. It is possible that while much of the burden of commercial tariffs is borne economically by property owners, the burden of an online sales tax is primarily borne by consumers.

“One factor to keep in mind is that we shouldn’t just keep increasing the UK tax bill. The Chancellor spoke about tax simplification eight times in his speech, but we could be set at six new taxes in the space of a few years – as many as the previous eight years. Adding six new taxes to the tax code is no simplification!

“While some of these new taxes are niche measures that will only be paid by a small number of large companies, the new health and social care tax will be paid by millions. Being established separately from national insurance and with slightly different rules, it represents an unnecessary additional complication of the tax system, straining scarce IT and other resources at a time when HMRC’s services to taxpayers and their agents are already put to the test. Presumably, the government preferred to pay this price for the appearance of creating a new tax rather than increasing the rates of an existing tax.

CIOT also commented on the expenditure review as it affects HMRC. John Cullinane said:

“The HMRC regulation equates to a real growth rate of 1.2% per year during this Parliament. It’s better than nothing, but given the significant pressures on HMRC and the changes – digitization, new taxes, new customs arrangements – that it has to deal with, it’s probably less than it needs.

“The importance of providing good customer service should not be lost amid the transformation ambitions set out in the spend review. “

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David A. Albanese

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