The grocer said that the current system was damaging to UK communities and businesses and suggested that an online tax could take pressure off high streets being adversely affected by business rates.

In written evidence to the Treasury select committee which is investigating possible changes to business rates, Tesco, which pays around £700m a year in business rates, said that the government could make £1.5bn by establishing an online sales tax, which would not include small businesses. It suggested that the government use that resource to facilitate a 20% cut to current rates.