The British Retail Consortium (BRC) has warned the government against introducing a “digital tax” in an attempt to make the business rates system fairer.
Chancellor Philip Hammond admitted in his spring Budget last week that the “digital part of the economy” needs to be better taxed.
The chancellor was responding to concerns about the current business rates system, which grew last month after research by business rent and rates specialist CVS suggested small and medium-sized stores would be hit harder by the revaluation than online players with out-of-town warehouses.
However, the BRC warned that an “online sales tax” was not the answer. In a statement, the lobby group said: “We agree with the chancellor’s comment in his Budget that in the medium term, we need a better way of taxing the digital economy.
“[But] the route to finding a better way of taxing the digital economy gives rise to a much wider set of questions than just a retail taxation question. Even within retail this is not about pitching online commerce against shops but about bringing business taxation in line with the changing nature of business in a modern economy.
“Certainly an online sales tax is not the answer. That makes no sense when so many retailers are online or want to move online and are trying to integrate the way their online offer works with their shops if they have them.
“Having any sort of new tax without sorting out problems with the taxes we already have is pointless.”