We thought we’d heard the last of an online sales tax when the treasury ruled it out saying “we do not favour a specific tax targeted at the online business sector, although we aim to ensure that tax principles are developed which can be applied consistently across the economy”. It’s back in the papers though.
Former online Dragon, Theo Paphitis is quoted in today’s Evening Standard as saying Business Rates are “no longer fit for purpose” and should be replaced with a 2% sales tax on shopkeepers and “tax-avoiding online retailers”. He added “You wouldn’t have to bitch about Amazon any more”.
The aim according to the Evening Standard article is to balance a reduction in tax on small retailers with an increase from online distributors. Where it falls down is that once again it’s aimed at tax avoiding corporations domiciled overseas and forgets about the thousands of small online retailers who pay business rates on their warehouses, VAT, Income Tax and National Insurance and have the added expense of courier deliveries (and yes you’ve guess it, online retailers almost certainly pay VAT on their courier invoices too!).
There’s no question that Business Rates are high, too high in many cases for smaller retailers to profit on the high street. A bit like the British Retail Consortium (BRC) members who earlier this year were also claiming to love the small independent retailer and claiming an online sales tax would be good for them and that without Business Rates they’d be able to return to the high street.
It would be wrong of me to suggest that the people that would benefit most are the BRC members and people like Theo Pahpitis who owns the Ryman high street chain, the Boux Avenue high street chain and the Robert Dyas high street chain.