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Level playing field call

Retailers urge Chancellor to shake-up tax system

Princes Street, Edinburgh

Retailers fear more closures without tax reform (pic: Terry Murden)

Britain’s supermarket and other retail giants have called on Chancellor Rishi Sunak to introduce a level playing with online companies that will save businesses and jobs.

Tesco, Morrisons, Asda and Waterstones are among those saying the current system puts retailers with large estates paying millions in business rates at a disadvantage to online firms.

They are currently enjoying a rates freeze, which was introduced to help them through the pandemic. Scotland has already agreed to an extension for a further three months.

A number of retailers, including the supermarkets, handed an estimated £2 billion in rates relief back to the state.

Even so, the chief executives of 18 companies and groups say there is an imbalance in the tax system and have written to the Chancellor warning that a return to the status quo “will hamper the recovery of the retail sector post-pandemic, potentially putting thousands of jobs at risk”.

The letter states: “Reducing business rates for retailers and rebalancing the tax system to ensure online retailers pay a fair share of tax would be revenue-neutral, provide a vital boost to bricks and mortar retailers and support communities in need of levelling up.”

Signatories include executives from property developer Hammerson, B&Q owner Kingfisher and Pets at Home.

The group stops short of asking for an online sales tax, though Tesco, which pays about £700m a year in business rates, has called for a 1% levy. It is not the first time it has requested such a move, having called for a 2% levy in April 2019, a year before the Covid crisis added to the sector’s woes.

Amazon’s overall business rates bill for 2020-2021 is estimated to be £71.5m – just 0.37% of its retail sales.

The move comes as Boohoo has today announced the acquisition of Burton, Dorothy Perkins and Wallis, but as with its purchase of Debenhams the deal does not include thousands of shops.

Online retailer Asos has acquired the assets of TopShop, also without the physical stores, prompting more calls for an online tax.

Daily Business reported on growing calls for an online tax

Amazon said that last year it created 10,000 jobs and last week announced 1,000 apprenticeships.

“This continued investment helped contribute to a total tax contribution of £1.1bn during 2019 – £293m in direct taxes and £854m in indirect taxes,” said a spokesman.

A Treasury spokesperson said: “We want to see thriving high streets, which is why we’ve spent tens of billions of pounds supporting shops throughout the pandemic and are supporting town centres through the changes online shopping brings.

“Our business rates review call for evidence included questions on whether we should shift the balance between online and physical shops by introducing an Online Sales Tax. We’re considering responses now and will update in due course.

“The 2020 Spending Review also confirmed that the business rates multiplier would be frozen in 2021-22, saving businesses in England £575 million over the next five years.”



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