High Streets Initiative Praseeda Nair · 29 January 2018
Fairer taxation of digital economy crucial to high street survival, MPs warn
The government must help independent shopkeepers remain competitive by reforming the way online firms such as Amazon and ASOS are taxed, according to a committee of MPs. In a report sent to chancellor Philip Hammond, the Treasury select committee warned that last year’s business rates revaluation had [damaged] the competitiveness of shops on the high street, pressing Hammond to address the existing advantage given to retailers in out-of-town business parks and those based online. MPs have begun to echo concerns already raised by high street bodies that government has failed to find an answer to the inherent advantage held by online businesses without a high street presence over Britain’s bricks and mortar retailers braced for a £280m business rates hike. According to figures released at April 2017’s business rates revaluation, by real estate advisory firm Altus Group, the average small high street shop would take on an extra 3, 663 in property taxes by 2022. Read more:?High street groups demand action ahead of unsustainable? business rates increaseHowever, while retailers struggle to absorb the increase, figures pointed to an advantage for online businesses with large, out-of-town warehouses. Amazon, for example, is set to benefit from a 148, 000 reduction in business rates liabilities across its nine distribution centres in England and Wales. Meanwhile, businesses such as ASOS, JD Sports and Sports Direct have also been able to base online operations outside of the high street. Commenting on the difficult questions? facing policy makers, Alex Probyn, Altus Group president of business rates, said: Taxation of the digital economy is already on the political agenda and it needs to be addressed this year, but the government shouldnt distort the business rates system. That’s not the right mechanism for rebalancing bricks and clicks. The solution is bound to be a difficult and challenging one. Probyn suggested that a more progressive approach to taxing online giants could fund relief measures for struggling high street businesses. He added ‘some retailers will have to absorb very large increases in their bills, which could spiral by a further 32 per cent plus three per cent inflation in April. Those bills could be more affordable if the playing field with their online competitors was levelled. Extra revenue from taxation of online retailers could be ring-fenced and used to provide additional relief for traditional bricks and mortar retailers. Competing with the growing strength of ecommerce has become a key challenge of high street retailers, and the Office for National Statistics (ONS) recently reported that online sales accounted for a record 18 per cent of all retail sales in December 2017.
ABOUT THE EXPERTPraseeda Nair
Praseeda Nair is an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.