Streets apart
» Town centre stores pay 8x more on rates than web rivals » 140,000 jobs lost already this year with more to come
A GLARING tax divide between high street shops and their online rivals has contributed to the loss of 140,000 jobs already this year.
An investigation by the Mirror found traditional retailers contribute nearly eight times more in business rates than internet-only competitors.
They also pay four times the corporation tax and twice as much national insurance for staff.
That is without the added costs in rent, heating and other outgoings.
Our findings also demonstrate how cash spent in high street stores – often employing many more staff relative to online competitors – goes back into the real economy in wages, as well as taxes.
Alex Cobham, of the Tax Justice Network, said: “The underlying problem is we have a tax system that is not fit for purpose and is better suited to the 1950s.
“We haven’t done enough to keep up with changes in commercial activities.
“We have ended up subsidising the sorts of business that don’t generate good employment and don’t contribute to the vibrancy of our high streets.”
Industry chiefs warn the uneven playing field between bricks and mortar retailers and online rivals has contributed to tough trading for the high street, which has reached crisis levels this year.
As a result, there are growing calls for an online sales tax on big internet firms – one of the demands of the Mirror’s High Street Fightback campaign.
Analysis for the Daily Mirror by the Centre for Retail Research said an estimated 140,000 jobs have gone in the first 10 months of 2018.
Half have been announced by large retailers, but centre director Professor Joshua Bamfield estimates the same number again have been lost, largely unnoticed, among small shops.
The figures emerged a day after Debenhams signalled up to 4,000 job losses with the closure of 50 stores in the next three to five years.
Reports out yesterday said Asda would start consulting with staff over a potential 2,500 job losses next year.
Amid news of the cuts, we looked at three years of accounts for Marks and Spencer, Tesco, Debenhams and John Lewis and compared them with Amazon, eBay, Shop Direct and Asos.
For every £100 spent on the high street, 74p goes to the Treasury in corporation tax, £13.20 goes on wages, 92p is paid by the employer in national insurance and £2.06 goes to business rates.
For online shopping, this plummets to just 20p corporation tax, £5.74 in wages, 56p NI and just 26p in business rates.
Amazon generated UK revenues of £8.8billion last year and paid an estimated £32million in business rates on 179 premises in England and Wales, industry experts Altus Group said.
Accounts show Amazon UK Services had an annual wage bill of £530million for nearly 20,000 staff – the bulk of its workforce here. But while the John Lewis Partnership, which owns department
stores, Waitrose and a big online arm, made higher revenues of £10billion, its business rates bill is thought to be more than five times higher at £174millon last year.
The wage bill is also nearly three times higher than Amazon’s at £1.42billion as it employs 85,500 staff – four times as many people.
Debenhams’ turnover is around £2.2billion a year, despite its troubles, and the rates bill for 166 shops rose to £80million this year. Its wage bill is £367million for 28,000 staff.
Sales at online fashion giant Asos were £1.9billion in 2017. Yet its business rates bill was an estimated £5.3million.
Because it employed fewer than 3,200 people in 2017, its wage bill was £142million. The Centre for Retail Research predicts 9,500 shops will close in 2018 and 10,200 in 2019.
This year began with 5,700 job losses as Toys R Us and Maplin collapsed. Poundworld went to the wall in June, with 5,100 job losses.
M&S has confirmed 100 store closures by 2022, Homebase is shutting 80, hitting up to 2,000 jobs,
Mothercare has said it will close 50 to 60 stores, and New Look is axing 60 UK stores and 1,000 jobs.
Asos said in response to our findings: “We pay our taxes wherever we operate. We always have and will continue to do so.”
Amazon insisted: “Amazon pays all taxes required in the UK and every country where we operate, pays millions of pounds more in business rates in England and Wales than suggested by the research, and our business rates bill has increased significantly in 2018.”
Meanwhile eBay added: “EBay. co.uk exists to support over 200,000 British businesses who sell with us.
“We don’t sell products of our own, or operate warehouses or delivery networks.”
And Shop Direct said: “We pay all taxes due to the Exchequer. We are supportive of measures which can boost UK consumer industries both online and on the high street.” councils crack down on landlords with run-down properties councils more compulsory purchase powers for neglected sites public transport into towns to rip-off parking charges
THE crisis on our high streets could not be more stark.
Around 140,000 jobs have been lost this year following a wave of store closures.
Even former bastions such as M&S and Debenhams are struggling in the face of the cold winds blowing through our retail sector.
So we welcome the fact Philip Hammond has, albeit belatedly, seen the need for action.
In Monday’s Budget he will cut business rates for almost 500,000 small retailers and unveil a £650million fund to boost town centres – both key demands in our High Street Fightback campaign.
But there is much more that can, and should, be done to revitalise Britain’s town centres.
We still hope Mr Hammond will use Monday’s statement to bring in a new tax on online sales to stop tech giants such as Amazon and eBay from exploiting their unfair advantage over bricks and mortar retailers.
Our planning laws must be reviewed, rip-off parking charges abolished and councils given stronger powers to help their areas flourish.
The country’s high streets are a crucial part of our communities. They are social hubs, places of enterprise and of entertainment.
The fightback has started, but there is more work to do.