Chancellor silence on online sales tax comes as blow to retail bosses

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Retail chiefs were disappointed by the lack of decision on an online sales tax in yesterday’s Budget speech.

Chancellor Rishi Sunak did not mention the mooted sales tax in his speech, but the Budget and spending review documents published yesterday did say ministers will “continue to explore the arguments for and against” the idea as there is a “high level of interest” in it.

The documents also said any revenues from the tax “would be used to reduce business rates for retailers with properties in England and with the block grants of the Devolved Administrations increased in the usual way”.

The government is drawing up a consultation on the policy, which will replace income lost from business rates reform.

Retailers have called for a UK-wide digital tax to level the playing field between online giants such as Amazon and struggling high street retailers.

Of the £7.9bn raised through business rates in the 2019/20 financial year, just 5% came from online retailers, despite them making up at least a quarter of the sales.

Mall operator Unibail-Rodamco-Westfield’s UK chief operating officer Scott Parsons said: “The decision by the chancellor to continue to avoid imposing any kind of tax on the ecommerce sector is another blow, as bricks and mortar retailers continue to operate on an uneven playing field.

“We challenge this government to be brave and smart enough to come up with a solution, so our high streets don’t have to shoulder virtually all of the tax burden for the retail industry and online pays its fair share.”