Row over online sales tax plan to rescue high street

A proposed online sales tax yesterday fired up debate on how to save the nation’s high streets.

tesco boss Dave Lewis had called on ministers to slap a 2 per cent levy on web sales.

Spokesmen for Sainsbury’s and Marks & Spencer would not support the tax idea directly but did call yesterday for an end to firms being taxed on the rateable value of their premises.

However Liz truss rejected the call for an internet surcharge despite the growing clamour for measures to help smaller shops.

the Chief Secretary to the treasury said she was prepared to reform business rates – but was adamant that an internet sales levy would be a ‘tax on families’.

Miss truss, who is expected to run to be the next tory leader, said it would lead to price hikes and hit small UK-based internet retailers as well

Yesterday’s Daily Mail as the global giants. But she did back calls for cuts to business rates, and proposed a ‘simpler, flatter tax system’ paid for from cuts to subsidies to businesses.

She told the Mail: ‘ the answer to the high street is making them more flexible and reducing the business rates burden. Not slapping a tax on families. i completely agree that we need to reform business rates. And in fact we have reformed business rates.

‘But an online sales tax is just going to be passed on to the consumer. it will hit British companies like BooHoo and push up the cost for families.’ Writing in yesterday’s Mail, Mr Lewis said a 2 per cent levy would raise £1.5billion, funding a rates cut at no cost to the Exchequer and helping small retailers.

He dismissed the idea that prices would go up, saying tesco would ‘not pass a penny of it’ on to customers.

Helen Dickinson, chief executive of the British Retail Concontinue sortium, said: ‘Retailers are united in their concerns about business rates. it is a tax that is paid in full regardless of whether a firm is in profit or in loss, and one which falls disproportionately on retailers.

‘However, an online sales tax would punish modern shopping habits, and is yet another cost on an already overburdened industry. As online sales to grow, such a tax would become an ever larger cost weighing down the retail sector. the solution is a comprehensive reform of business taxation, starting with the broken business rates system that is wreaking havoc on our high streets.’

the Sainsbury’s spokesman called for ‘fundamental reform of business taxation which recognises that, in an increasingly digital economy, a firm’s property assets are no longer a reasonable barometer for how much tax it should pay’.

Steve Rowe, chief executive of Marks & Spencer said: ‘We recognise the importance of paying a fair contribution, but we believe business rates are an unfair burden of taxation directly contributing to the challenges the high street is facing. We believe these challenges will continue until the system is reformed to create a level playing field between high street and online retailers.’

A senior retail executive said: ‘Everyone wants lower rates but there are different views on what would work.’