Amazon and other major online retailers could be facing a new online sales tax to help the UK pay its debts following extensive borrowing during the pandemic.
Treasury sources have confirmed that Chancellor Rishi Sunak is considering initiating a tax that will target companies who have done well out of the coronavirus crisis in order to help pay back UK government debts.
The new tax is being considered as part of a business rates review after a consultation was held last year. It also emerges following calls from business leaders of 18 companies, including Tesco, Morrisons, Asda, Waterstones, and more, for a fundamental overhaul of how retailers are taxed in the UK.
Amazon saw sales in the UK increase by 51 per cent to nearly £20bn in 2020 as lockdown restrictions forced people to shop online. A report last week however, has suggested that the online behemoth paid just £71 million in business rates on its entire UK estate, including fulfilment centres, research and development centres, corporate offices in London, Amazon Lockers, Whole Foods Market stores, and delivery stations.
Furthermore, and according to real estate advisor Altus Group, who conducted the research, this represented a tax to turnover ratio of just 0.37 per cent.
Tesco’s chief executive Ken Murphy has now pushed for a one per cent levy on online sales, a move which could drastically alter the UK’s retail landscape, and a move that is now being considered by the Chancellor as attention turns to plans to help the UK’s high streets survive the pandemic.
Leaked emails showed Treasury officials had summoned tech firms and retailers to a meeting this month to discuss the online sales tax. The Sunday Times reported that Downing Street is also looking at introducing an ‘excessive profits tax’ on companies that have seen profits surge due to Covid-19.
“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,” said a Treasury spokesman.
“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.”
The Centre for Retail Research said that high street retailers paid around 2.3 per cent of annual retail sales in business rates before the pandemic.
Helen Dickinson, chief executive of the British Retail Consortium, said that ministers should not prevent businesses’ ability to recover from the pandemic.
“The key to reviving our high streets is fundamental reform of the business rates system and we oppose any new taxes that increase the cost burden on the industry which is already too high,” she said. “Economic recovery after Covid will be powered by consumer demand – the Chancellor should ensure he doesn’t introduce any new taxes that stifle this.”
Amazon has said that it will not comment on the online sales tax reports.
