An “Amazon Tax” on online sales could impact millions of the UK’s online shoppers as retailers simply pass the costs along, experts have warned.
Earlier this week reports emerged that chancellor Rishi Sunak was considering announcing a new online sales tax during the spring Budget next month, in a bid to “level the playing field” between online and physical retailers.
While the details of the potential tax have not yet been officially announced, it is understood that online retailers will be required to pay a percentage of their sales to the government.
“The e-commerce giants aren’t going to pay through the nose – they will simply pass any new tax on to the consumer,” ParcelHero’s head of consumer services David Jinks said.
“Many people, particularly the elderly and the frail, are unable to risk shopping in-store because of the pandemic. These people, many of whom have turned to online shopping for the first time, would bear the brunt of the new tax.
“We entirely agree with the British Retail Consortium’s view that an online tax would hit High Street retailers who have online operations and result in higher costs for shoppers at a time of severe weakness in the British economy.
“It’s simply naive to think that most of today’s successful retailers are not already online. Those that aren’t are staring extinction squarely in the face and no new online tax can save them.”
This already happened in April, when the UK government rolled out a “Digital Services Tax” to ensure search engines, social media services and online marketplaces which derive value from UK users pay their fair share of taxes, adding a two per cent levy on all revenues made in the country.
Almost immediately both Amazon and Google announced they would simply be passing the two per cent price rise on to retailers and advertisers, who in turn passed this along to shoppers.
“It’s a perfect demonstration that long-suffering shoppers are at the bottom of the tax chain – they’re the ones who foot the final bill,” Jinks added.
Online grocery giant Ocado, which has already seen its shares prices drop on news of the upcoming tax, has also spoken out against it.
Its chief executive Tim Steiner said: “We already have sales tax in the UK, it’s called VAT. It’s applied equally to whoever sells the product based on the products.
“I don’t think it’s appropriate for anyone to put a sales tax on a retailer because they operate from a different type of premises or they’re a more efficient operator.”