Apr 19, 2022
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Retailers show 'overwhelming support' for online sales tax - report

Apr 19, 2022

The introduction of an UK online sales tax has the “overwhelming” support of both retail landlords and retail clients, a survey by Colliers shows.


Some 89% of those surveyed agreed to a new tax, provided it takes the pressure off business rates in the high street.

Interestingly, even 71% of retailers who already have an online presence supported the new tax and, unsurprisingly, 100% of those who don’t have an online presence support it too. Only 11% of all those surveyed don’t want a new tax.

The survey also asked whether ‘click and collect’ should be subject to an online sales tax and opinions were more divided with 54% of those surveyed saying ‘yes' and 46% saying ‘no'.

Also interesting, taxing click and collect products was supported by a higher percentage of high street retailers (57%) who also have an online presence than retail landlords (55%).

Given the complexities of introducing the new tax, Colliers also asked what products or size of retailer should be exempt from a online sales tax, or pay a reduced amount. Some 71% of those surveyed put essential items into the bracket of exempt or a reduced tax, 66% said small retailers, 55% said web-based apps in stores and 52% said digital products.

However, only 31% said sales by emails should be exempt or pay a reduced tax, with 69% saying these products should pay an online sales tax.
The survey was carried out following the government’s announcement of a consultation on an online sales tax policy on 25 February, part of an ongoing engagement with the industry, which is due to close on 20 May.

Commercial landlord Colliers said this consultation “has grown from calls for a fairer retail playing field and a tax system that does not penalise high street retailers, who pay business rates on their physical stores, whereas purely online rivals do not”.

It added that high business rates on the retail sector have been cited as one of the key components for shop failures and the decline of the high street in recent years.
John Webber, Head of Business Rates at Colliers said: “Although our survey is a snapshot of our retail clients it does throw up some interesting pointers. It certainly seems there is overwhelming support to bring in some sort of online sales tax to try and level the playing field and take the full burden of business rates off bricks and mortar retailers.”
Webber added: “We are not saying an online sales tax will solve all the issues facing the high street, and there are several grey areas  as our survey shows. However given the increasing trend of buying online — a trend that was amplified during the pandemic and looks likely to continue — it is only right that we should try and re-balance the system  and create a fairer playing field for all.

"But it is also  essential any monies raised by an online tax is used directly to alleviate the high business rates burden and does not go into a government black hole. It should also not take the government’s attention away from what is essential — a fundamental reform of the current business rates system.”

According to the ONS, physical retailers pay a disproportionate amount of the business rates burden paying between one quarter and a third (£7.26 billion) of the total bill, despite the gross value-added from retail is less than 10%. And of the total rates bill paid by the retail sector in 2018/9, 94% was funded by the high street and only 6% by online retailers. 

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