Tesco joins calls for online sales tax

Tesco has called for a 1 per cent sales tax to be levied on online competitors such as Amazon, joining 18 companies including Morrisons, Asda, Waterstones and shopping centre operator Hammerson in criticising a return of property-based business rates.

The supermarket chain's chief executive Ken Murphy has asked Chancellor Rishi Sunak for a "level playing field" on tax ahead of next month's budget, claiming the current system disadvantages retailers with large physical retail estates versus online firms and "will hamper the recovery of the retail sector post-pandemic, potentially putting thousands of jobs at risk".

Property-based business rates are due to be restarted in April, having been paused since UK lockdown began in March.

The news comes after criticism was directed at Tesco and Morrisons for paying dividends to shareholders, despite accepting government assistance. The supermarket chains handed back business rates relief worth £1.8 billion to the government.

Retail adviser Altus Group said that without the government's tax holiday brick-and-mortar retailers would have paid £8.25 billion in business rates in 2020, and that Arcadia would have been liable £91 million in business rates on its 444 stores - including Topshop, Burton and Dorothy Perkins - in 2020

Robert Hayton, UK president of property tax at Altus Group, said: "If some additional money can be created through something like an online sales tax, and then crucially, if that can be ring-fenced and made available to make some improvements to business rates, then I think that's a really positive outlook.”

Amazon posted $26.5billion (£19.3 billion) in UK sales in 2020 - a 51 per cent jump year-on-year, while their overall business rates bill was estimated at £71.5 million by researchers.

"We've invested more than £23 billion in jobs and infrastructure in the UK since 2010,” said an Amazon spokesperson.

A Treasury spokesman said: “We want to see thriving high streets, which is why we’ve spent tens of billions of pounds supporting shops throughout the pandemic and are supporting town centres through the changes online shopping brings.

He added: “Our business rates review calls for evidence including questions on whether we should shift the balance between online and physical shops by introducing an online sales tax. We’re considering responses now.”

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