The Tesco chief executive Dave Lewis has called for a tax on goods sold online to assist the High Street and preserve retail. He proposes a 2% levy on goods sold via the internet which he claims would raise £1.25 billion per annum. The money, he argues in an interview for the Daily Mail, should be used to help traditional retail businesses.
Three years ago I talked about a potential lethal cocktail of pressures in the retail industry and now you are seeing that come to fruition. Retail is truly national. If you look at gross Value Added Tax, direct tax, indirect taxes, employment, the number of suppliers to our stores and our business, the contribution in terms of the wider community – the role of retail in the economy is significant and it will be affected by this. The tax burden has reached the point where companies are going bust. Has the Government thought through what happens when retail starts to decline and if the job losses start to become significant? The time for talking is coming to an end and the stalling has to stop. If we cannot reach agreement, the UK will go it alone with a digital services tax of its own.
– Dave Lewis, Chief Executive, Tesco
The online sales tax, often referred to as an ‘Amazon tax’ in the the press, is a flawed idea on several levels. And, as has been noted by numerous Tamebay readers over recent weeks, since the idea was first mooted by the UK finance minister, Chancellor of the Exchequer Philip Hammond, it wouldn’t hit Amazon itself particularly hard at all and the ‘Amazon Tax’ moniker is unhelpful. It would, however, be an additional financial and admin burden on marketplace merchants.
If the High Street and bricks and mortar businesses need a shot in the arm then the government could help with review and reform of business rates (which Cameron and May’s governments have made noises about for years but not taken any tangible moves on) and possibly even consider rent control legislation on retail premies. The businesses themselves also need to reform: better efforts with digital will help. It is particularly bizarre that any business leader, and notably the Tesco chief executive, should call on the government for higher taxes, especially when Tesco would be subject to it.