Tesco chief demands £1.25bn ‘Amazon tax’
‘Drastic Dave’ boosts MoS campaign – and says windfall should aid struggling retailers
TESCO chief executive Dave Lewis has called for a £1.25 billion tax on products sold via the internet to prevent Britain’s shops being annihilated by online rivals.
In an interview with The Mail on Sunday, Lewis said Chancellor Philip Hammond should impose a 2 per cent charge – dubbed an ‘Amazon tax’ – on goods sold online.
The Tesco boss – whose bold approach at the supermarket giant has earned him t he moniker Drastic Dave – said it was time to ‘shift the burden of raising the country’s income’ away from store chains.
Lewis said traditional retailers are caught in a stranglehold of rising costs, taxes, higher wages and competition from aggressive online firms.
He said the money raised should be used to provide a tax break for retailers, which employ 4.2 million people. His intervention – a highly unusual and frank analysis by a corporate chief – will be regarded as the most dramatic call for Government action yet from an industry besieged in a rapidly changing world.
It is a significant boost for The Mail on Sunday’s Fair Play On Tax campaign, which was launched last week. Lewis declined to say whether any communication with Government has taken place. But it is understood that Whitehall officials are aware of his analysis.
His call follows a vow from the Chancellor last week that Britain might ‘go it alone’ with a plan to tax digital firms if it could not reach a consensus with other countries to do so.
Lewis said such a digital services tax was ‘completely separate’ from his proposal.
Industry chiefs say the retail sector has had a torrid year – described by many as ‘the worst in living memory’ – with 40,000 jobs lost. Retail chains including House of Fraser, Toys R Us, Maplin and Poundworld have collapsed while many others have closed swathes of stores.
At Tesco’s office in Clerkenwell, Central London, Lewis said the failure to tax digital firms comprehensively had now become an ‘industry’ issue. ‘ Three years ago I talked about a potential lethal cocktail of pressures i n the retail industry and now you are seeing that come to fruition,’ he said. ‘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?’
Lewis conceded Tesco, despite delivering more than 40 per cent of Britain’s online food orders, would ‘without doubt’ benefit overall. But he said all his supermarket rivals ‘would get a much better deal out of this than I would’.
Online sales make up about 17 per cent of Britain’s £370 billion a year retail industry and the share is growing rapidly. Retailers have long complained that they pay a quarter of Britain’s £30 billion business rates bill despite representing just 5 per cent of the economy. This is because they have a large physical presence. They also have to stump up their share of the £56 billion corporation tax take each year.
By contrast, rapidly growing online firms – many of which utilise business models that wipe out profit or use offshore havens to slash their tax bills – contribute little of either.
One retail executive last night described Lewis’s plan as ‘an Amazon tax’ in reference to longstanding accusations that the company pays far less proportionately than many of its store-based competitors.
Amazon has been accused of paying as little as 2.3 per cent on its UK profits. The UK corporation tax rate on profits is set at 19 per cent.
Lewis said his plan could be used to cut business rates across the sector by 20 per cent. He 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.
‘Retail is truly national. If you look at gross Value Added Tax, direct t ax, i ndirect t axes, 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 Treasury said it has set up an expert panel to assess the issues and it already has a £10 billion long-term help package in place.