The Chief Executive of Marks & Spencer has called proposals for an online sales tax ‘morally bankrupt’ saying that it would harm customers already struggling with rising costs.
In a comment piece for The Mail on Sunday, Steve Rowe admitted the tax system did need to change, but added “you can’t tax people back to shops”.
A Treasury consultation on the online sales tax has just closed.
Supporters of the tax argue it would help redress the balance between online sellers and bricks and mortar retailers, who generally pay much higher levels of business rates.
Sainsbury’s and Tesco have publicly supported an online sales tax and argued for a similar reduction in business rates.
The tax also has backing from the British Independent Retailers Association, which represents small independent retailers.
But the M&S boss – a lifelong employee of the company – said: “Now – more than ever – we cannot overlook the potential impact on hard-pressed consumers who already swallow a sales tax through VAT.
“If an online sales tax is applied in its broadest sense, consumers will shoulder a further tax on even essential items such as prescriptions, baby items and food staples.”
How would an online sales tax affect small retailers?
It’s important to say that no decisions have been made on the tax yet, so we can’t know how it will look.
Generally speaking, we can be confident that the tax would benefit retailers with a physical presence and harm companies that do more online sales.
However, it’s possible that some of the smallest online retailers could be excluded from an online sales tax in the same way that some small firms don’t pay VAT.
Launching the consultation, Lucy Frazer, Financial Secretary to the Treasury said:
“We want to see thriving high streets and a fair economy as we move forward from the pandemic, which is why our business rates review cut the burden by £7 billion for businesses and committed to looking at an Online Sales Tax – given the imbalance identified by some between online and in-store retailers
Whilst we’ve made no decision on whether to introduce such a tax, it’s right that, given the growing consumer trend to shop online, we work with stakeholders to assess the appropriate taxation of the retail sector.”
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