By Altus Group | March 9, 2019

High Streets Government Minister, Jake Berry, has promised to extend the Digital Services Tax to include a “2% tax on online retail” to save Britain’s high streets.

Consumers have been abandoning British high streets choosing instead to shop from the comfort of their sofas or desks and that shift looks unstoppable with Professor Joshua Bamfield at the Centre for Retail Research predicting that online sales will account for 30% of total retail spend towards the end of the next decade.

Robert Hayton, Head of U.K. business rates, Altus Group, said, “Traditional bricks and mortar retailing is obviously property intensive. The reliance on property leads to a larger tax to turnover ratio compared with online only” saying that “traditional retail accounts for £17.12 billion of the overall £66.55 billion Rateable Value for all sectors in England and Wales that forms the basis of how business rates bills are calculated.”

The news comes after the Chancellor Philip Hammond signalled last summer that the Government was listening saying “we want to ensure that taxation is fair between businesses doing business the traditional way and those doing business online”.

Northern Powerhouse and High Streets Minister, Jake Berry, has now confirmed that the Digital Services Tax, announced at last October’s Autumn Budget, will be extended to online retailers saying that if the Government cannot secure international agreement “we will come forward with our own 2% tax on online retail to ensure that we can continue, as we did in the last Budget”

Under the Digital Services Tax, media firms and search engines will pay 2% tax on the advertising revenue earned from UK whilst online marketplaces will pay the tax not on the payment from the consumer but on the “platform fee”. Berry’s comments signal the way for that tax to be extended to include online retailers.

Robert Hayton added that the Minister’s commitment was “unequivocal” but pressed for its introduction at the Spring Statement next week in order to avoid further deterioration of our high streets” but stressed “that the additional tax raised must be ring fenced to provide for a fairer distribution of the overall revenue.”

 

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