The Courier & Advertiser (Angus and Dundee)
Would tax hold out a lifeline or send retailers up the Amazon?
As internet shopping continues to drain business from Scotland’s high streets, Michael Alexander explores options to boost the fortunes of small independent traders – including a levy on their rivals
It’s been described as the year of store closures as many big brands suffer money woes, including Toys R Us, Poundworld, Mothercare, Maplin and the Original Factory Shop. Ironically, the existence of many of these companies’ superstores in out-oftown retail parks has been blamed for the “death” of high streets – many of which continue to struggle due to a combination of people doing more online shopping, relatively high business rates and the shift to out-oftown retail experiences.
But would slapping a so-called “Amazon tax” on online retailers really help Scotland’s beleaguered high streets?
Perthshire Tory MSP Murdo Fraser thinks so. As reported this week, he blames the demise of town centre shopping on internet rivals’ lower costs in areas such as business rates.
The MSP believes a levy of 2% to 5% for web purchases would help to level the playing field for struggling shopkeepers.
His call comes after it was revealed that Amazon, which has a distribution centre in Fife, had its tax bill slashed despite increasing profits in the UK.
Yesterday Philip Hammond hinted at possible tax changes to ensure high street retailers are able to compete with online rivals, hours after House of Fraser was rescued in a last-ditch deal.
“We want to make sure that the high street remains resilient and that we also make sure that taxation is fair between businesses doing business the traditional way and those doing business online,” the Chancellor said.
He said that a change in the system “requires us to renegotiate international tax treaties because many of the big online businesses are international companies”.
However, an organisation that represents major retailers, including Amazon, said an “Amazon Tax” would punish high street shops as well as online specialists.
Ewan Macdonald-russell, of the Scottish Retail Consortium, said: “Digital retailing isn’t the problem.
“It’s already increasingly difficult to distinguish between online and physical sales as retailers look to adopt multi-channel operations.”
Pressure from the internet, pressure from large national retailers and changing attitudes in society to how people attach themselves to their town recently led former international marketing executive Graeme Black and his wife Anne to close their Funky Rascal independent quality clothing store in Crossgate, Cupar, and move the business online only.
Amid concerns about Brexit, and with most of his stock imported from the EU, Mr Black has been experimenting with the possibility of basing all his stock with Amazon in Germany to avoid potential tariffs and currency fluctuations. The father-oftwo, who believes Cupar town centre is “surviving but not thriving”, said: “I fail to see how ‘punishing’ online retailers will do anything positive to help high street retailers.
“This ‘levy’ is just a tax which will go into the central government’s coffers.”
Bill Harvey is Business Improvement District (BID) manager with Kirkcaldy4all – a business partnership which works to promote Kirkcaldy’s town centre as a place where people want to “work, shop and spend their leisure time in a welcoming environment which is customer focused and investment-friendly”.
His main concern about an “Amazon tax” is that big companies would simply pass on extra charges to consumers.
Stuart Mackinnon, external affairs manager for the Federation of Small Businesses in Scotland, said: “The Scottish Government are looking to pilot new rates schemes – to take money from out-of-town and online operators and reduce bills on high streets.
“We’d argue that any pilot needs to combine changes to local rates with other activity to boost town centres, like locating more public services on our high streets.”