Retail sector reacts to shelving of online sales tax

The news that Chancellor is shelving the online sales tax has caused ripples of disappointment across the retail rector.

Bricks-and-mortar retail was left sighing with relief as Jeremy Hunt brought in a business rates relief scheme, a freeze on multipliers and increased support packages.

The next revaluation of rates will occur in April 2023, however Hunt said it could result in an increase in costs due to inflation.

In order to cool fears, Hunt revealed a £13.6 billion over the next five years as they transition to their new bills.

While physical retail can feel somewhat satisfied on one hand, the shelving of the online sales tax has caused disappointment across the sector.

A HM Treasury Autumn Statement policy paper on business rates read: “Following the recent consultation on an Online Sales Tax (OST), the government has decided not to introduce such a tax. A response to the Online Sales Tax consultation will be published shortly.”

Retail trade union, Usdaw said it was “deeply disappointed that the Government has today rejected an Online Sales Tax, which would help rebalance taxation between online and in-store retail and was supported by many retail businesses.”

Many believe that the introduction of an online sales tax would level the playing field.

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Udaw general secretary Paddy Lillis said: “The current business rates system is not fit for purpose, as it places bricks and mortar retailers at a significant disadvantage to online retail, action is needed to level the playing field.

“So it is deeply disappointing that the Government has rejected the opportunity to fund substantial reductions in business rates with an online sales tax, which could allow high street retailers to innovate, grow, protect and create jobs.”

“We urgently need to level the playing field between online and bricks-and-mortar retail, something Usdaw and many major retailers have called on the Government to do.

Lillis believes that just a 1% online sales levy could help to raise approximately £1.5 million and fund a 20% cut in the current “outdated and imbalanced commercial property tax”.

“Today the Chancellor has opted for sticking plasters that do not offer a long-term fix to a long-term problem. In contrast, Labour is committed to fundamental reform of unfair business taxes and will provide much needed support for our high streets up and down the country, to ensure that online giants pay their fair share,” he added.

Unibail-Rodamco-Westfield UK chief operating officer Scott Parsons believes that the government has “missed an opportunity” by avoiding implementing an online sales tax.

“Whilst I welcome the government’s clear and decisive action on business rates for the retail, hospitality and leisure sectors, particularly on revaluation, the Chancellor has missed a major opportunity by scrapping an online sales tax,” he said.

“Physical retailers pay significantly more in taxes as well as being faced with rising operational costs, while online retailers continue to be let off the hook.

“I believe online retailers can happily coexist with a healthy high street but only when a broad-based, clear and easily levied online sales tax is introduced.”

The future of the high street is always a point of concern from retail professionals and retailers alike.

Estate agency Knight Frank has also announced its disappointment with Hunt’s move.

Company head of rating Keith Cooney said: “The Government also announced they will not be addressing the advantages of the online behemoths by introducing an online sales tax which will surely further erode and hollow out the high street.”



2 Comments. Leave new

  • Do you really think gov was going to introduce OST?


    Sunaq was never a fan, his name was seen nowhere near OST consultation.

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    November 21, 2022 3:51 pm

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