High Street Wants Cuts to Business Rates and a New Online Sales Tax

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May 23rd 2022
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High Street Wants Cuts to Business Rates and a New Online Sales Tax

Retailers are joining efforts to lobby the Government to penalise online sales in order to save the High Street.

A cut to business rates of 20 percent and a new sales tax on online sales set at 2 percent is being proposed by leading figures in High Street retail.

Leading the charge is Alan Stewart, the finance chief of the UK's largest supermarket chain Tesco, who is rallying together other High Street retailers including rivals such as Co-op.

Tesco is currently going through cost issues and has already made thousands of staff redundant in attempts to curb the losses. One such way to gain traction is through removing a competitive advantage, as well as an overhead in the form of business rates.

Companies such as Amazon, even though online based, still have giant warehouses to service their customer bases. These warehouses will still attract business rates, albeit at much lower rates than those paid by High Street retailers. The main reason is that Amazon will locate warehouses on outskirts or rural areas where rental prices will naturally be lower. Business rates are based on the rental value so that is an advantage for the online sellers.

The consensus about the death of the High Street has narrowed on to business rates in recent times. Just last December, the founder of Sports Direct, Mike Ashley, spoke in front of a government committee about cutting business rates. His proposal was far harsher on online retailers and delivered using stronger words. Ashley proposed a blanket sales tax of 20 percent on online sales.

Revo, a professional body for retailers, is backing the move to reform business rates and is liaising with the Sajid Javid, the recently appointed Chancellor.

The British Retail Consortium too has backed part of the proposals to cut business rates but however they have rejected any moves to insert an online sales tax in its place.

An online sales tax would impede efforts by retailers who, though late to the party, are already attempting to modernise their businesses and move into online sales. If business rates were cut and an online sales tax introduced, these retailers would have ended up being hit twice. Once on the way out of the high street, and once on the way into online sales.

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