Online sales tax would stifle innovation, says M&S boss STEVE ROWE

From the day I walked into the workshop as a 15-year-old Saturday boy, I’ve been a proud trader.

I’m proud to be part of an industry that provides meaningful employment opportunities for more than three million people, from the co-worker running the cash register to the co-worker managing the supply chain, anchoring communities across the country. and encourages entrepreneurship and innovation as we seek to meet the ever-changing needs of customers.

This week marked an important deadline for the future of this dynamic and vital sector, as the government closed its consultation on a potential new online sales tax (OST).

Wrong direction? Steve Rowe worries about possible online sales tax

With M&S often the standard-bearer of traditional retail, it would be easy to assume that I would want to usher in any “solution” claiming to level the playing field for brick-and-mortar retailers, who already contribute over 25% of taxes collected by the tax authorities. despite its 5 percent contribution to the total economy.

However, I fear that, far from “rebalancing” the burden of business pricing for online players, its introduction will stifle the very innovation that brick-and-mortar retail needs to compete in the digital age.

No retailer – regardless of their operating model – would argue against the need for urgent reform of an unfair and outdated business pricing model.

Nor would they dispute that it is unacceptable that rates have risen 30% over the past decade while retail rental values ​​have fallen by the same amount.

Landlords also have a role to play, as rents have certainly not fallen as a result. The sad reality of these challenges is laid bare in the record vacancy rates and falling footfall we are seeing in our cities and towns.

But another tax on an already overburdened sector is not the solution.

The simple fact is you can’t tax people in stores. You have to invest and adapt.

Undoubtedly, the rapid growth of e-commerce has had a profound impact on retail, but the whole economy is going digital.

Online ordering is only part of how we live and shop; we click and collect goods, make appointments online or order a takeaway directly from our mobile.

When you look at these types of services, the interdependencies of modern omnichannel retail are clear.

It is wrong to pit bricks and mortar against each other online. Our future demands a mix of digital services and physical retail so customers can shop how they want and when they want.

When we do this, stores can be a real source of competitive advantage – delivering a modern, inspiring and convenient shopping experience.

It’s the job of retailers to innovate and invest to keep customers coming back, and it’s the government’s job to ensure a level playing field and to make sure the regulatory environment doesn’t make that more difficult.

However, the solution on the table threatens “traditional” retail with a triple tax lock on its future growth. Ever-increasing commercial tariffs prevent us from investing in our stores and our communities.

Rising National Insurance and a broken apprenticeship tax model punish us for employing people nationwide in rewarding, high-paying roles. An online sales tax would tax our future.

With the future as much about platforms as it is about retailers, it’s important that the UK has its share of winning platforms that can compete globally. Disadvantageous UK-based platforms will do nothing but cede the market to US and Chinese players and set back one of the few innovative and growing segments of the UK economy.

And it will do nothing to help our stores. The introduction of a new tax will simply mean that retailers will cut their fabric accordingly, starting with the less profitable parts of their business. In the case of multi-channel retailers, unfortunately this will most often be high street stores, especially in city centers which are already in need of investment and jobs.

Now more than ever, we cannot ignore the potential impact on busy consumers who are already swallowing sales tax via VAT.

If an online sales tax is applied in its broadest sense, beleaguered consumers will face additional tax even on essential items such as prescriptions, baby items and staple foods.

At any time it would be regressive, but to introduce it at this time would be moral bankruptcy.

The government has made it clear that fundamental rate reform is out of the question, and it’s easy to see why. It is a stable and visible tax grab for the coffers of the Treasury, which funds many vital public services.

And while retail is paying more than its fair share, many sectors are contributing – notably large employers like hospitality and hospitality – the solution must be pragmatic reform to bring rates back to the reasonable levels they used to be. at the beginning.

There are three quick wins that the Treasury could easily implement. Rebase the multiplier for ALL taxpayers to 35p from the current unsustainable level of 51p.

Ending the downward transition so that reductions in property value are immediately reflected in rates. Maintain upward transitional relief to help businesses cope with larger bills and fund them centrally – easy to do when tax uptake is guaranteed to be at the same level each year.

These practical changes are expected to be funded through the OECD’s work on international corporate tax rules, which will replace the UK’s Digital Services Tax next year.

This will ensure that “mobile” multinationals – many of which are tech companies – pay their fair share, and that merchants and innkeepers can continue to serve their communities.

Government’s job is not to hold back the tide of change like King Canute – we all know that can’t work.

But if it can help UK businesses, customers and communities adapt to the emerging digital economy, I see a brighter future for the retail sector and the country.

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David A. Albanese