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Firms fear costs

Doubts spread over SNP’s Amazon tax plan

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A digital sales tax has been proposed

Business leaders fear SNP plans to introduce an online sales tax would be another blow to recovery hopes and may force some firms to leave the country.

The party has proposed a digital sales tax, a so-called “Amazon tax”, to help regenerate town centres.

It says a 2% levy could raise £200 million and help level the playing field between online retailers and high street shops.

The proposal was among the SNP’s commitments in last week’s election manifesto and could extend beyond retail into technology and tourism.

But the plan could backfire as firms see it as another additional cost. There are also concerns that it would drive up prices.

Business leaders say they could only accept such a tax if it were introduced across the UK.

Daily Business reported last week that a Scottish-only digital sales tax may prove difficult to implement in isolation in view of the global nature of online sales. Chancellor Rishi Sunak was expected to announce an online tax in the Budget but is believed to have delayed his plans in order to engage with other tax jurisdictions.


Mr Sunak is also concerned that a further tax could damage trade talks with the US after Westminster introduced a 2% digital services tax last year, which largely affected US giants Amazon, Google, and Facebook.

Kate Forbes, the Scottish finance secretary, appears to have acknowledged the difficulties of Scotland going it alone with the proposed tax and said Holyrood would work on the measure with Westminster to “see how it can be introduced as part of our wider retail strategy”.

In any case, it is believed the Scottish government would need UK government permission to implement the tax on its own.

A report in February from the Scottish Government-commissioned town centres review group also called for a digital tax, and its report appeared to target the likes of Uber and Airbnb. It could also embrace other online transactions such as hotel and cinema bookings.

David Lonsdale, director of the Scottish Retail Consortium, said: “Consumer spending is the mainstay of Scotland’s economy and it offers the best hope of powering the economic recovery.

“Plans for a freeze on income tax rates should help, but consumers will be wary of the mooted digital sales tax – which would be double taxation if it was charged on top of the existing VAT – which could push up prices on services and goods across the whole economy.”

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