Online sales and corporation taxes in Sunak’s sights
Rishi Sunak: looking to raise taxes
Chancellor Rishi Sunak is considering a hike in corporation tax and introducing a tax on online shopping as he seeks ways to pay off the cost of propping up the Covid-hit economy.
As the Prime Minister talks about emulating low-tax Singapore, Mr Sunak is looking at raising taxes in order to narrow a deficit heading for £400 billion.
Corporation tax is currently 19% and each percentage point rise would raise £3.4bn for the Treasury which is now gearing up for the 3 March Budget. The Tory manifesto commitment not to raise income tax, national insurance and VAT leave Mr Sunak’s options limited. An increase in capital gains tax is a possibility, aligning rates more closely with income tax, along with taxes on second homes.
In a letter to the Chancellor, the CBI today outlines the support measures its says are needed to help protect UK companies through the Spring.
These include extending the Job Retention Scheme, business rates relief and lengthening repayment periods for existing VAT deferrals until the end of June.
Shoppers may face higher prices for buying goods over the internet if the Chancellor opts for an online sales tax.
An online tax on parcels is up for discussion
They have been forced online because of shop closures, making an online tax an increasingly lucrative and badly-needed source of revenue. A 2% levy on all goods bought online would raise £2 billion a year.
Jesse Norman, Financial Secretary to the Treasury, has confirmed that it is among the ideas being considered.
Mr Norman told the Commons Treasury committee: “When we thought about business rates in the recent consultation, we touched on the idea of an online sales tax and just put that out there for discussion and evaluation and we’re still reflecting on that.”
His comment was seen as a hint that Mr Sunak may be looking at an online sales tax rather than a wealth tax.
Companies selling over the internet have been among the big beneficiaries of the lockdown, along with delivery firms.
Even in normal times they have a cost advantage over bricks and mortar shops because they do not need to pay rent or maintenance costs on properties. However, the issue divides retail leaders, some saying a tax would simply push up prices for consumers.