The UK government will assess whether online sales tax could address the fiscal imbalance reported by the retail sector

  • As promised in the Autumn Budget, the UK Government has released a consultation to explore the arguments for and against an Online Sales Tax (OST)

  • The consultation follows concerns reported by businesses about a potential fiscal imbalance between in-store and online retailers

  • • While no decision has been made on whether to move forward with an online sales tax, the consultation will focus on the designs and potential impacts on consumers and businesses of implementing implementation of such a tax.

The consultation kicked off during the Autumn Budget as part of the government’s conclusion to its review of corporate rates, where stakeholders including some of the UK’s best-known businesses called for a online sales tax to help rebalance the tax system by funding lower business rates for the retail sector. Given the significant changes in the retail market and the evolution online, it is only fair that the government reassess the taxation of this sector, although no decision has yet been made on the implementation of such a tax.

Today, the government has delivered on that commitment.

Lucy Frazer, Treasury Financial Secretary, said:

We want to see thriving high streets and a fair economy as we move away from the pandemic, which is why our review of business rates has reduced the £7billion burden on businesses and we are committed to consider an online sales tax – given the imbalance identified by some between online and in-store retailers

Although we have not made a decision on whether to introduce such a tax, it is true that given the growing trend of consumers to buy online, we are working with stakeholders to assess the appropriate taxation. of the retail sector.

As part of the three-month consultation, stakeholders will be asked to provide their views on the challenges of designing an online sales tax, including which products and services would be affected and whether it would be a flat tax based on the number of transactions or deliveries, or a tax based on income.

The consultation looks at the effect an online sales tax would have on consumers and businesses, which will also be a determining factor in policy decisions.

The UK government has supported retailers throughout the pandemic with our economic support package worth around £400billion, including tax cuts such as corporate rates and VAT relief, funding through grants and business loans, and wage support through our global leader. leave scheme.

The Autumn Business Rates Review further backed the High Street, reducing the rate burden by over £7bn and making the system fairer, including through more frequent reassessments, freezing the multiplier and halving business pricing for the retail, hospitality and leisure industry. for 2022-23.

More information

  • The consultation will take place from February 25 to May 20, 2022

  • The government recognizes that a range of business models operate in retail in the UK, which is the mark of a dynamic and innovative sector. It also recognizes the value of busy shopping streets and town centers to local communities as places to live, work and visit.

  • Although no decision has yet been made on whether to proceed, if implemented the revenue from such a levy would be used to fund commercial rate reductions for retailers with properties in England. and fund Decentralized Government block grants in the usual way.

  • If the government proceeds with an online sales tax, the precise nature of the associated business rate reductions will be reviewed at a later date.

  • This is a complex issue, so it is right for the government to consider the policy options in detail before making a decision.

  • Read the online sales consultation

  • Read the Business Rate Review Final Report


Source link

David A. Albanese