Chancellor Rishi Sunak is considering an online sales tax to raise £2bn a year and level the playing field between digital and high street businesses.
Ideas being considered include the imposition of a 2% levy on online sales and a charge for online deliveries, newspapers have reported.
Sunak aims for an online tax to generate a “sustainable and meaningful revenue source for the government” and help embattled bricks-and-mortar retailers to compete, according to The Times.
The Treasury called for evidence on the issue last week and flagged worries that the business rates burden borne by high street operators effectively penalised them, because online rivals do not operate from such “high-value” properties.
It said that the health emergency “has had a significant impact on how business is done” and that the government must act to make sure that “the tax system raises sufficient revenue”.
However, there are also fears that an online tax might raise prices for consumers.
The abolition of business rates altogether is being considered. Rates could be replaced by a capital values tax, which would be calculated on the value of the land and the buildings on it. The owner of the land, rather than the business operating from it, would be responsible for payment.
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