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Budget: Retail

Chancellor drops hints at online retail tax

shop closure
Shops under threat: (photo by Terry Murden)

The Chancellor dropped broad hints of a tax on online retailers which was an issue raised by Daily Business ahead of today’s statement.

There were few other measures to specifically help bricks and mortar retailers.

David Lonsdale, Director of the Scottish Retail Consortium, said:The Chancellor’s Budget will have a mixed effect for Scottish retail.

“Workers will benefit from the increase in the personal allowance this year and next. With the projected growth in household spending set to almost halve this year compared to last, that commitment will provide timely and welcome support for family finances as inflation and council taxes creep up.

“There was however little in the statement which will actually reduce the cost burdens facing Scottish retailers, perhaps because public sector borrowing is set to add a further £120 billion to the national debt over the next three years.

“That’s a concern as retailers and others face significant cost increases due to changes in the value of Sterling and government-imposed measures on employment, including from next month, the apprenticeship levy.

“In his remarks about business rates the Chancellor mooted the idea of finding new ways to tax online firms.

“We would suggest a cautious approach towards this. In our industry for example the majority of the top ten online brands are established bricks and mortar retailers, and so conjuring up an online-only tax isn’t the answer to the exorbitant cost of business rates faced by shopkeepers or indeed other sectors facing profound structural changes.

“Indeed the last thing retailers need is yet more tax or effectively double taxation, at a time when they are moving online to meet their customers’ changing shopping habits.

“Ultimately public policy itself is a contributing factor to the rising cost of employing people and maintaining an extensive store footprint, and is making online investment more attractive as the cost and capability of technology improves. What is needed is fundamental reform of rates, so that it better reflects trading conditions and leads to a substantially lower tax burden.

“The Scottish Government is set to receive Barnett consequential funding, and we are keen to see that invested in GDP-enhancing physical and digital infrastructure and in ensuring Scotland is a competitive place to do business.” 

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