20,000 women to lose jobs
Online tax in view after Boohoo and ASOS deals
Boohoo will add more high street brands to its portfolio
Further calls for a tax on online retailers are likely to follow after new figures confirmed the gulf in outgoings between internet traders and those with bricks and mortar stores.
Fashion giants Asos and Boohoo paid just £48.1 million tax last year — a fraction of the £160 million in business rates paid by Sir Philip Green’s Arcadia Group and Debenhams whose brands they are acquiring.
ASOS is expected to confirm a near-£300m deal for Arcadia’s TopShop and Miss Selfridge early this week, according to The Sunday Times., thereby completing a double swoop by online retailers on established high street businesses.
However, hundreds of stores will close and thousands of jobs will be lost – affecting up to 20,000 women – as neither ASOS nor Boohoo, which last week acquired Debenhams in a cut-price £55 million deal, want the cost of running physical assets.
Boohoo is also in exclusive talks to buy Burton, Dorothy Perkins and Wallis from Arcadia.
Chancellor Rishi Sunak is already said to be considering rises in fuel duties, capital gains tax and corporation tax – possibly from 19% to 24% – in order to plug the estimated £400 billion gap which the Covid rescue packages have left in the public finances.
Pressure is now mounting on Mr Sunak, not only to rebalance the costs of business between online and physical retail, but also to plug a big hole in lost business rates revenue as stores close.
An online tax is emerging as a 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, recently confirmed that it is among the ideas being considered.
Mr Norman told the Commons Treasury committee last week: “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.