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West End retailers pile on pressure for online sales tax

Retailers in London’s West End are urging the government to enforce a new online sales tax to ease the burden of business rates.

The New West End Company, which represents more than 600 firms in London’s West End including Selfridges, Marks & Spencer and Fenwick, outlined that a 1% tax on online businesses’ revenues could provide more than £5bn relief for high street retailers’ rate bills.

This would allow the government to cut business rates for high street firms by an average of 17.5% at no cost to the treasury, NWEC said. The proposals would only apply to businesses that are wholly or largely online so that high street retailers with a strong online presence are not taxed twice.

Over the coming months, NWEC will urge the chancellor to even the playing field for high street businesses and consider the proposals in his autumn budget later this year.

The organisation pointed out that online businesses currently pay a tenth of the business rates paid by high street businesses. British Retail Consortium (BRC) figures show that retailers already pay more in business rates than other types of firms, with sales accounting for 6% of GDP but paying 26% of business rates.

The proposals, set out in a new report commissioned by NWEC from Arup and local government expert professor Tony Travers, will primarily benefit high street retailers, restaurants and bars which typically use larger store spaces in prime locations.

“Business rates are currently the biggest tax that high street retailers pay, accounting for nearly half [45%] of retailers’ tax bill,” said Sir Peter Rogers, chairman of NWEC. “The current structure of business rates, whereby they are linked to the value of occupied property, not economic performance, provides online retailers with an unfair advantage and a 90% discount in an already struggling bricks and mortar retail environment.”

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