Online sales tax proposed to help curtail high street losses

An online sales tax that would apply to firms like Amazon and other retailers is being considered by the UK Treasury as a way to balance the dramatic decline in high-street retail since the start of the Covid-19 pandemic.

Officials have said such a tax would help to “shift the balance” between the rise in online spending and the reduction in visitors to physical shops.

With high-street retail businesses already suffering prior to the pandemic, Covid-19 has dealt a deadly blow to many firms, with a record number of shops disappearing from shopping locales across the country in the first half of 2020.

Meanwhile, Amazon’s UK sales soared last year to a record £19.4bn as people trapped at home were forced to purchase online. Despite this, the amount of taxes paid by the firm will only have minimally increased due to a complex tax avoidance scheme that it has implemented using Luxembourg as its main hub, Paul Monaghan, chief executive of Fair Tax Mark has claimed.

Delivery firms such as Deliveroo and online retailer Asos were also among those to see profits spike during the lockdowns of the past 12 months.

But the newly proposed levy on online shopping could help to stem the collapse of high street firms, ministers hope.

The move is being considered as part of a review into business rates following a consultation last year.

A Treasury spokesman said: “We want to see thriving high streets, which is why we’ve spent tens of billions of pounds supporting shops throughout the pandemic and are supporting town centres through the changes online shopping brings.

“Our business rates review call for evidence included questions on whether we should shift the balance between online and physical shops by introducing an online sales tax. We’re considering responses now.”

Despite Amazon’s booming sales, real estate adviser Altus Group said it had a tax to turnover ratio of just 0.37 per cent compared to high street retailers who paid around 2.3 per cent of annual retail sales in business rates.

Amazon said it would not comment on the online sales tax reports.

A spokesman instead highlighted its investment into the UK, saying: “Last year we created 10,000 new jobs and last week we announced 1,000 new apprenticeships.

Sign up to the E&T News e-mail to get great stories like this delivered to your inbox every day.

Recent articles