Tesco chief calls for £1.2bn ‘Amazon tax’ to help shops
THE boss of Tesco yesterday called for a new tax on online products that would bring in £1.25billion a year, to ease pressure on high street retailers.
Dave Lewis urged Chancellor Philip Hammond to slap a two per cent charge on goods sold via the internet to “shift the burden of raising the country’s income” away from shops.
He said: “Three years ago I talked about a potential lethal cocktail of pressures in the retail industry and now you are seeing that. The tax burden has reached the point where companies are now going bust.
“Has the Government thought through what happens when retail starts to decline and if the job losses start to become significant?”
Big high street names including House of Fraser, Marks & Spencer and Toys R Us have collapsed or announced store closures this year, with an estimated 40,000 job losses.
Many cited business rates – a property tax charged on non-domestic buildings – as a reason for this.
Despite representing just five per cent of the economy, high street retailers pay about a quarter of Britain’s £30billion business rates bill. But online retailers like Amazon avoid the tax by using out-of-town warehouses.
Mr Lewis said while Tesco would “without a doubt benefit” from his proposed tax, rivals “would get a much better deal than I would”. And he said his plan could see business rates cut in the sector by 20 per cent.
The businessman, who was nicknamed “Drastic Dave” for his ruthless management style during 27 years at Unilever, added: “If I were the Chancellor I’d be saying, how do I keep this industry going so I could keep this [tax] take for longer, because if I’m not careful I’m going to kill it.”
Alex Schlagman, founding partner at SaveTheHighStreet.org, echoed Mr Lewis’s warning. He said: “The success or failure of the high street impacts us all. It provides the fuel that powers the local economy and the place where millions of people interact in the real world every day.
“The stakes are high. We need to act now to ensure the conditions for success on the high street, for this year and for the long term.”
Sainsbury’s chief financial officer Kevin O’Byrne said: “We pay £550million a year in business rates compared with £65million corporation tax and welcome any measure that creates more of a level playing field in the industry. However, we do not want to be taxed twice on our online businesses, which are run largely from our shops.”
In August, Mr Hammond admitted the business rates system was outdated and last week warned Britain would “go it alone” with a digital services tax if a consensus could not be reached on how to levy firms like Google, Apple and Amazon.