Tesco has become the latest major retailer to demand an “Amazon tax” be imposed across the UK to level the playing field between physical and online players.
The chief executives of 18 companies, including Tesco, Morrisons, Asda, Waterstones and other retail property owners, wrote to chancellor Rishi Sunak to call for a fundamental overhaul of how retailers are taxed in the UK.
The group of signatories called on Sunak to ease the business rates tax burden on physical retailers, especially those with large store estates like supermarkets, in the upcoming budget next month.
Separately, Tesco’s chief executive Ken Murphy pushed for a one per cent levy on online sales, a move which could drastically alter the UK’s retail landscape.
It comes after a report emerged last week that Amazon paid just £71 million in business rates on its entire UK estate including fulfilment centres, research and development centres, corporate offices in London, Amazon Lockers, Whole Foods Market stores, and delivery stations.
According to real estate advisor Altus Group, who conducted the research, this represented a tax to turnover ratio of just 0.37 per cent.
On average, UK bricks-and-mortar retailers paid around 2.3 per cent of their annual retail sales in business rates, according to the Centre for Retail Research.
Business rates have been on hold for months in a bid to help retailers survive the pandemic, but these are due to come back into force in April.
The group warned that returning to the old system, “will hamper the recovery of the retail sector post-pandemic, potentially putting thousands of jobs at risk”.
Aside from business rates reforms, The Sunday Times reported over the weekend that the government is working on proposals for an “excessive profits tax” for companies that experienced a surge in profits due to the pandemic.
According to leaked emails, the Downing Street policy unit is working on a one-off Covid windfall tax to be applied to firms who saw their business boom since national lockdowns in the UK began in March 2020.
Officials at the Treasury are also believed to be meeting tech firms and retailers this month to discuss how an online sales tax would work.
Neither tax rise is expected to be introduced in March, but senior government sources speaking to The Sunday Times said the increases could form a centrepiece of efforts to cut Britain’s debts in the autumn.