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Chancellor considers tax reform options

Added on: 30th July, 2020 by O1

Chancellor considers tax reform options

Last Updated:
Sun, 2 August 2020

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The chancellor of the exchequer, Rishi Sunak, is examining proposals for an online sales tax to provide a “sustainable and meaningful revenue source for the government” and help bricks-and-mortar retailers to compete.

In a call for evidence published recently, the Treasury highlighted concerns that the business rates system “imposes an unreasonable burden on retail” and is effectively penalising the high street because online rivals did not need to rent “high-value” properties.

Business Improvement Districts across the country have lobbied persistently on the antiquated and unbalanced nature of Business Rates. Orpington 1st sat on the All Party Parliamentary Group meeting discussing the tax in Autumn 2018, joined the nation's BIDs in pushing for the relief granted in 2019/20 and 2020/21, and pushed again for a complete reform of business tax in an online conversation with Gareth Bacon MP in May this year.

The Times has reported that the government is considering two forms of online sales tax:

• a levy of around 2 per cent on goods sold online, which would raise about £2 billion a year.

• a mandatory charge on consumer deliveries, which would form part of a campaign to cut congestion and toxic emissions.

However, the British Retail Consortium, which represents big online firms as well as high street chain stores, said such a tax would lead to higher prices online for consumers.

Online shopping now accounts for £3 in every £10 spent.

Tesco’s chief executive, Dave Lewis, previously called for an “Amazon tax” on online sales, saying a tax of 2% on online sales of physical goods would raise £1.5bn a year, enough to cut business rates by 20% for all retailers.

The Treasury said: “The pandemic has had a significant impact on how business is done, particularly for firms which rely on customers visiting them. The full impact of this will become clear over time. As the economy moves towards recovery the government will continue to support businesses as far as possible, but it must also ensure that the tax system raises sufficient revenue to fund the services that have been essential parts of the pandemic response, as well as public services more broadly.”

The Treasury is also understood to be considering radical plans to abolish business rates and replace them with a “capital values tax” based on the value of land and the buildings on it. The tax would be paid by the owner of the property rather than the business leasing it.

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