Gove tax rise for online retailers’ warehouses blocked by Treasury

A TAX increase on warehouses used by internet giants to help struggling high streets has been blocked by the Treasury, The Daily Telegraph can disclose.

Michael Gove, the Communities Secretary, suggested the idea as he develops a package of measures for a relaunch of Boris Johnson’s “levelling up” reform agenda due next month.

But the Treasury rejected the supplementary levy on warehouses, with Rishi Sunak, the Chancellor, eager to cut tax where possible amid pressure from Tory backbenchers.

Mr Gove’s initial interest in announcing a form of business rates cut also appears to have received a lukewarm reception in No 11 Downing Street, where Mr Sunak works.

“It is not a goer,” said a Treasury source about a slashing of business rates next month, noting a major cut in rates was announced in the last Budget that will bring £7 billion to businesses over next five years.

The policy clashes reflect the challenge Mr Gove, Mr Sunak and Mr Johnson are facing as they attempt to shape and improve the levelling-up plan.

The phrase was adopted in the 2019 election to sum up Mr Johnson’s domestic reform agenda. The drive focuses on reducing geographical inequality, but critics say it is ill-defined.

The Johnson Government has long looked at whether more tax can be secured from internet giants such as Amazon and Google while helping struggling high street firms.

It is not the first policy clash between

Mr Gove, put in charge of the levelling up plans in September, and Mr Sunak, who is concerned by the scale of government borrowing.

For much of the discussions the Treasury has made clear no extra spending beyond what was announced in the Budget is available for the levelling up relaunch.

The Telegraph reported that Mr Gove’s hopes of announcing a new manufacturing White Paper were blocked by the Treasury as it would raise expectations of extra spending to come.

There has, however, been speculation that the firm position from the Treasury on no more money, having announced across the board spending increases at last year’s Budget, could be softening.

The speech, which will be accompanied by a White Paper, had been expected before the end of 2021, then the end of January, but has now slipped to February.

‘Michael Gove suggested the idea as he works on a relaunch of Boris Johnson’s “levelling up” reform agenda’