Online sales tax proposal for Autumn Budget

February 9, 2021

The UK Treasury is considering online sales tax for retailers such as Amazon, Asos and Ocado, after a drastic increase in online shopping and the current “uneven system”, has caused many in-store retailers to be at a disadvantage.

Supermarkets, including Asda, Morrison’s, and now Tesco, call for Chancellor Rishi Sunak to tax online sales and enable a “level playing field”, especially with the property-based business rates beginning again in April, for the first time since the initial lockdown.

These repeated lockdowns, combined with increased online sales, caused many shops to disappear indefinitely from high streets. The absence of these stores has then ultimately changed the landscape and attraction of towns and cities. Due to this reason, and the effect collapsed high streets will have on communities, the Treasury wants to “shift the balance” of in-store and online spending.

In 2020, online spending increased by 46 per cent, compared to 2019, and now accounts for around 30 per cent of overall retail sales in Britain, reveals official figures.

Ministers believe that an online sales tax, including a possible new levy on online shopping, may help reduce the risk of high streets deflating.

Many back this proposed online sales tax. However, the British Retail Consortium argues the tax would hit high street retailers with online services, whose operations have halted during the pandemic.

They also worry about increased costs for consumers during a time of severe weakness in the UK economy and how it will affect their willingness to purchase items altogether.

Rishi Sunak does support this tax measure but will likely wait until the Autumn Budget to launch, rather than using the 3 March Budget.

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