This article was published on August 10, 2018

We don’t need a new ‘Amazon tax’ to save the high street

We just need to enforce the taxes we already have.


We don’t need a new ‘Amazon tax’ to save the high street

Philip Hammond, Britain’s Chancellor of the Exchequer, wants to save the UK’s embattled high street. To do that, he’s proposing a tax on online retailers.

Hammond hasn’t revealed any details, especially when it comes to how it’ll be applied. It’s also unclear if the tax will apply to all online retailers, or just the well-known behemoths, like Amazon and Very.

This is a neccessary move to protect a high street that’s suffered several significant losses in previous years. This year alone has seen the closure of Maplin and Toys R’ Us. Discount retailer Poundworld also very nearly went under, but was saved at the 11th hour by Irish retail family Hendersons.

That said, the move is misguided. The woes of the high street are partially caused by online retailers, but that’s only a small part of the story.

Business rates, which are the taxes disproportionately paid by brick-and-mortar establishments, are crushing. Since they’re based on estimated and actual rent values, online retailers have largely managed to escape them.

Business rate relief would go a long way to ensuring the viability of the high street against online retailers, which have lower costs and higher profit margins.

This would be a bitter pill for the Exchequer to swallow. According to official Office of Budget Responsibility (OBR) statistics, business rates will bring in £32.4 billion in taxes during the 2020-2021 financial year.

Any loss could be offset by closing existing tax loopholes, and ensuring that giants like Amazon pay their fair share in taxes. Amazon is especially vociferous in avoiding corporation taxes. Earlier this month, it was reported the company had halved its corporation tax bill, despite profits tripling.

There’s also the argument that any new taxes would disproportionately be borne by smaller retailers, who lack the resources and expertise required to avoid them.

The high street employs millions of Brits, and is worth protecting. That said, we don’t need a new tax. We need to ensure the existing ones are equitably enforced.

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