Officially the Chancellor is looking to help the high street and traditional retailing in general by introducing an online tax for the likes of Amazon who many blame for the demise of shops and department stores.
“If they taxed these big online firms at source so things were fair I don’t think anyone would have a problem,” said Ian Carrotte of ICSM Credit, “but the likelihood is online firms will pass the costs onto their customers or worse freeze staff wages and cut the cash they pay to couriers.”
Writing for Mailonline Danyal Hussein reported: “Rishi Sunak is weighing up a new online sales tax to raise £2 billion a year for the Treasury and to stop the high street from collapsing amid the coronavirus pandemic. With the High Street decimated amid the coronavirus lockdown and huge numbers of job cuts and store closures, the chancellor is looking at proposals to level the playing field. He is examining introducing an online sales tax to provide a ‘sustainable and meaningful revenue source for the government’, while allowing physical stores to compete.”
The reports suggest the Government are looking at two forms of tax. One is a proposed 2% levy on goods sold online, which could raise £2bn a year with a second charge on deliveries to cut congestion and carbon emissions.
It is generally accepted that there will be a hike in taxes across the board once the crisis has passed but another tax suggested is one already imposed in Germany. Taxing the over 40s on a higher rate to pay for their future health care is an idea from the chancellor that is widely being reported.
Another idea is to abolish business rates and replace them with a ‘capital values tax’ which would be based on the value of land and the buildings on it paid by the land owner.
“Business rates are the bane of many businesses,” said Ian Carrotte of ICSM Credit, “as they are seen as unfair and uneven affecting a large range of struggling enterprises. Thye have been a cash cow of councils for years who generally don’t want to lose the income.”
He said somebody would have to pick up the tab if business rates were abolished and it would likely be the tenant with a more expensive lease and the consumer or clients who face higher charges.
Danyal Hussein reported: “The business rates system is currently based on shop rental values, which are calculated every five years. They are paid by tenants, the businesses leasing the property, rather than landowners. However the system has come under fire as companies that need a presence in town centres pay higher rates than their online and out-of-town rivals. During lockdown, the chancellor introduced a £10 billion business rates holiday for the retail hospitality and leisure sectors for one year.”
Ian Carrotte said SMEs already pay over the odds in taxes and rates and the fear is that despite the changes they will continue to be penalised by the Government with taxes in order to pay for Covid 19.
About ICSM Credit
ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel – while at the moment there’s a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach – ask for details from Paul.
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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk