Could Online Sales Tax Help to Preserve the High Street?

On one of my recent excursions to the local high street during the Easter bank holiday, something caught my eye amidst the hustle and bustle of Primrose Hill: not one, but two Amazon delivery vans, accompanied by an Ocado van, all simultaneously servicing the needs of the neighbourhood.

Now, you might expect me to launch into a tirade about the inefficiencies of online retailers and their delivery logistics. But truth be told, considering the sheer scale and complexity of their operations, I have to hand it to them — they do a commendable job at routing and organisation. In fact, the Post Office could probably take a few notes from their playbook.

No, my gripe isn't with delivery efficiency. It's with what lies beneath this snapshot of contrasting shopping experiences — a tale of tax inequality that sees traditional retailers burdened with hefty financial obligations while their online counterparts breeze through relatively unscathed.

According to the Centre for Retail Research, traditional retailers are shouldering a hefty 25% of all business rates paid by UK companies, totalling a staggering ￡7,625 million pre-pandemic in 2018-19 despite retail's contribution to the national economy, clocking in at almost 10% of GDP. On the flip side, online retailers seem to have found the ultimate tax loophole and paid a mere ￡457 million in business rates during the same period. That's 6% of the total retail rates bill and a paltry 0.6% of their sales. Talk about an unfair advantage!

?In response to mounting pressure for reform, the government flirted with the idea of an online sales tax (OST), sparking debates far and wide. In February 2022, HM Treasury dipped its toes into the waters, launching a consultation to explore the feasibility and potential impacts of an OST. However, come autumn of the same year, the government made a U-turn, opting against the implementation of an OST due to concerns about its effectiveness in providing widespread relief from business rates.

But here's where it gets interesting. While the OST may have been shelved, voices from all corners chimed in, echoing the sentiment that reforms to the business rates system are sorely needed. Whether for or against the OST, there's a consensus that the current system is in dire need of a makeover.

?So, where does that leave us? How does the government navigate the delicate balance between supporting the high street and nurturing the growth of online retail? It's a conundrum that demands attention, requiring innovative solutions to level the playing field and ensure fair competition.

?As we ponder these questions, one thing remains clear: the high street is more than just a collection of shops — it's a cornerstone of our communities, a hub of activity, and a symbol of tradition. It's time we unleash the power of legislative reform to breathe new life into our beloved high streets, ensuring they remain vibrant and resilient in the face of evolving retail landscapes.?

In the end, it's not just about taxes and regulations; it's about preserving the heart and soul of our towns and cities. And that's a mission worth fighting for.