The Guardian has reported that:
The British retail industry has warned that an online sales tax would push up prices for consumers after it emerged that Rishi Sunak is exploring plans for a levy to protect high street shops from mounting competition.
Against a backdrop of rising retail job losses and store closures triggered by the coronavirus crisis, the chancellor is looking at taxing internet shopping for England and Wales as a potential replacement for business rates, the levy on companies based on the premises they occupy.
They added:
A consultation paper said the Treasury was “exploring the potential strengths and weaknesses of alternative property and online taxes put forward as possible replacements for rates”. According to the Times, Sunak is considering two types of online retail tax: a levy of about 2% on all goods bought online, raising £2bn a year; and a tax on consumer deliveries, which would also be expected to curb traffic and pollution.
So, for the second time in a day we have a proposal from the government for the introduction of a regressive tax. This morning I noted their plan for a flat-rate tax to fund old-age care. Now we have another flat-rate consumption tax which will be charged without consideration of the income of the taxpayer, inevitably resulting in an unjust distribution of the resulting liability.
What is readily apparent is that the government has no consideration for the delivery of social justice through the tax system. Nor has it any desire to tackle inequality. If it had any concern with regard to either issue these proposals would not have been made.
There are other flaws with this proposed tax on on-line deliveries, including the fact that in due course this might be seen to be deeply prejudicial to the disabled, vulnerable people in society, people who work irregular hours and the elderly, all of whom should be favoured by the tax system, I would have thought, but those issues just need to be noted for now. What really matters is that the government appears to be determined to use the tax system to increase inequality with the proposals that are being made at present, and that should shock anyone who thought that one of its principal purposes was to address that very issue.
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A more obvious solution would be to look at equalizing business rates between physical shops and the on line retailers premises.
Also of course to equalize the treatment of their profits
How would you propose that?
What when they are the same?
As a ‘for example’ the business rates on an ‘out of town’ fulfillment center are per square foot a fraction of those on a High Street Store.
Also we have allowed Amazon to get away with paying a pittance in Corporation Tax by employing avoidance methods small traders can only dream of.
There are also issues about ‘exploitative labour practices’ in both the fulfillment centers & delivery companies that need addressing.
B ut as you say when those are addressed – which they need to be it may not help ‘The High Street’ but will put an end to on-line’s unfair advantages
There are issues – undoubtedly- and they need addressing – but online is here to stay, come what may
I have lost count of the number of initiatives to save the dead parrot that the High Street is. Shopping, like travel, like work, like most other things in life, evolves – the High Street was dying long before Covid came along.
Having spent most of my working life in retail, it pains me to say it, but the best thing would be to move on and, if at all possible, come up with an alternative use for the space.
Re-arrange ‘dead’, ‘horse’, ‘flog’ to create a well known phrase or saying.
I think this is something to now be thinking.
What we also need to rethink is how former retail space is reused
Once again, the only place to find any sanity is your blog. I was really pleased that you’d blogged about the elderly care proposal.
With MMT clearly showing that tax is about preventing inflation and delivering greater social justice, the language in the articles is farcical – neither tax will raise anything since tax doesn’t fund spending. It’s increasingly apparent how badly served we are by a media and govt that doesn’t understand money
Not understanding how a monetary economy inter-meshes with democracy means the UK operates like a country full of semi-educated apes. Worse the inhabitants blunder around causing unnecessary harm to each other through this ignorance!
As with George Clark, the High Street is dead. The genie that is online shopping has long left the bottle never to return. The death knell of the High Street started with the rise of the supermarkets and has been on a long and winding slope ever since.
So, this represents or should represent an opportunity for small to medium sized towns to re-shape the High Street into a more community based space. Shops, leisure, education and living all contained within the footprint.
Charging a tax on online shopping is not the answer in my view. The likes of Amazon will just charge this out meaning the disadvantaged will be further disadvantaged. What are your views on a turnover tax? Taxing the likes of Amazon (and other companies such as Starbucks) on revenue generated in the UK and not profit?
Taxes in turnover make no sense on companies – they are just added to the price and become another regressive tax like VAT
Interestingly enough in ‘Heat’ George Monbiot points out that retail consumes a lot of energy & he seems (from memory) to favour the idea of delivery services – by electric vehicles and a single provider not multiples as more efficient.
This is maddening, it really is.
For a party that supposedly hates tax, they don’t half know how to hurt people with it – and at a time like this?!!! In (supposedly) a recovery)?! Taxing the middle aged for getting old – Logan’s Run anyone?
I suppose the reality is that when you are in charge of something you do not understand, you clutch at straws in order to try to make things work. That’s what I see here.
Or it is project fear tactics again OR a ‘throw a dead cat on the table’ moment?
We are looking in my City at using ex-retail units as accommodation. It’s the future but with fewer jobs who can afford to buy them or rent them?
The shortcomings of relying on one sector of the economy are becoming apparent.
At this point shouldn’t Rishi be considering increasing corporate tax to 2010 levels and closing loopholes so that there are fewer opportunities for big corporations to evade tax.
This country is losing billions in revenue which the government appears to be comfortable with.
There would be no need to collect tax from people already struggling to cope, if big corporations paid their dues.
I promise you, important though collecting tax from large companies is it will not dekuver what you claim, by a very long way.
What’s the point of supporting retail when Brexit’s going to kill it off anyway? It’s becoming increasingly apparent there’ll be very little importing happening after the transition period ends as there are no systems yet devised let alone able to be implemented to support this. Many of the shops will have nothing to sell. Bye, retail, and that’s a consequence of Brexit, not the online competition.
Why not a higher rate of VAT on selected products or on products sold online ? I remember when I was in Customs and Excise in the 1970’s we had a higher rate of 25% on “luxury” products
It could be done
But remember, tax does not fund spending
So if it is done it should be for other reasons e.g. green ones
The idea of taxing online purchases really scares me. I am disabled and mostly housebound. The idea of me visiting “real shops” is terrifying to me. I’d be in a wheelchair, being pushed by my husband.
How can we make sure anyone will properly social distance from me? I’ve spent the last 20 years or so buying online so I can maintain my own spending in my own time, without having to be taken out to shop. Why should my husband have to take me out shopping so I don’t have to pay extra in tax for online shopping?
In these days of Covid-19 I really don’t want to go out shopping in the high street or malls. I’m vulnerable. So it’s really cruel to tax me for being vulnerable.
Please pass this on to anyone you know who can help quash this dreadful discriminatory idea from our chancellor.
I noted my concern for people in your situation in what I had to say
I fear the government does not care
Thank you Richard.
I did note that you’d taken your concern about my situation onboard. I just wanted to clarify to others who read your Blog what the reality of it might be like for many disabled people.
I’m very lucky in that my husband helps me day to day. But that’s beside the point. I want to be able to send presents to my grandchildren and my children. Why should I have to pay extra tax to do that because I am only able to shop online? It’s cruel and discriminatory.
Thank you for your blog. And your thoughts.
I agree with you
It’s a bad tax proposal at almost every possible level
Because its clearly discriminatory it’d probably be unlawful so as things stand it wouldn’t survive a court challenge. That’s while we still have a non-political judiciary, of course.