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Retailers welcome government hints at tax reform

Retailers have welcomed signals from the government that business rates reform and an online sales tax could be on the horizon but warned against any short-term “sop” to business.

Greg Clark, secretary of state for business, energy and industrial strategy told a fringe meeting at the Conservative Party conference in Birmingham this week that adjusting business rates would be one way of “recognising” the role high streets play in their local economies. 

Meanwhile, chancellor Philip Hammond warned that the UK would “go it alone” and introduce a digital sales tax on online retailers to level the playing field for bricks-and-mortar retailers.

The chief executive of one high street multiple said any re-evaluation should provide balance for online and traditional retailers.

“It’s time to review rates. It’s not about just online paying more in this digital age, it’s about taking the right approach. Any business which wants to progress needs a multichannel approach now, so we need healthy high streets and good digital businesses.

“It is about how we all make a contribution and how to pay a fair share and redressing the balance between physical and digital retailing.”

The chief executive of another high street retailer said the biggest problem facing retailers was business rates: “They are a property tax but that is not how business is done any more.

“If the tax was an added VAT, then it would tax everyone equally. We need fewer, simpler taxes, not more.”

The managing director of one footwear multiple said that if the government does consider introducing a levy on online purchases, it needs to thoroughly consider all implications that any new tax would bring: “Rates that are historically linked to property prices are a bit erratic. However, tax can affect people’s choices. If government levies a tax on the internet [sales], how will that affect people’s buying?

“An online sales tax can be a bit of a grey area. I can sell one pair of shoes in my store and another online, and they generate a different rate of tax. You can now buy online, but pick up in store. Is that an online or a high street sale?”

Another retailer warned that government had bigger priorities than business rates: “I can’t imagine they are going to do anything, with everything they have to do such as Brexit, it is likely to be the last thing on their minds. This is a bit of a sop.”

One property expert was also sceptical about whether the government could spare time to implement any real changes to the tax: “A tweak of business rates would be a bit of a fudge, we need a bigger overhaul of the tax system, a change is overdue but needs to be part of a comprehensive overhaul.

“[Any government plan] will be a bit of a sop, as they need to be seen to do something.”

 

 

 

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