A parliamentary committee has recommended the government "urgently" consider an online sales tax to help secure the future of the UK's high street retailers.

Online companies led by Amazon account for a fifth of sales

With online companies, led by Amazon, now accounting for about a fifth of sales and with the number of bricks-and-mortar retailers declining in town centres at a rapid rate, the House of Commons' Housing, Communities and Local Government Committee said on Thursday that an online sales tax - and, possibly, an increase in VAT and 'green taxes' on deliveries and packaging - could help “level the playing field”.After a lengthy inquiry, the MPs concluded high streets needed “meaningful relief” from business rates pegged to commercial property values. Their report said “dated policies and an unfair tax regime” must change to enable town centres to survive.

Online sales tax and "green taxes" could address imbalance for high street

The committee said that Amazon’s business rates bill amounted to about 0.7 per cent of its UK turnover, while bricks-and-mortar stores were paying up to 6.5 per cent.“The government should conduct an assessment of proposed remedies proposed to the committee over the course of the inquiry, including a sales tax, an increase in VAT, an online sales tax and ‘green taxes’ on deliveries and packaging,” the MPs said.However, the report added that high street retailers must accept that they needed to adapt by offering what online outlets could not offer, by focusing on such areas as personal interactions and convenience.Clive Betts, who chairs the committee, said, “The growth of online shopping has profoundly changed retail in the UK, and the knock-on impact on high streets has been stark.“It is likely that the heyday of the high street primarily as a retail hub is at an end. However, this need not be its death knell.“Local authorities must get to grips with the fact that their town centres need to change; they need to innovate, setting out a long-term strategy for renewal, reconfiguring the town centre and finding new ways of using buildings and encouraging new independent retailers.“Business rates must be made fair. They are currently stacking the odds against businesses with a high street presence and this must end.“Tax reforms are needed to level the playing field between online and high street retailers, and we urge the government to investigate all the options in this area, including an online sales tax.“We must begin a period of renewal and regeneration, establishing high streets as that must be changed to allow high streets to survive."

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High street must also adapt to changing UK marketplace

Helen Dickinson, chief executive of the British Retail Consortium, commented, “The committee are spot on when they say retailers are paying more than their fair share of tax. In fact, retail accounts for five per cent of the economy, pays 10 per cent of all business tax and shoulders 25 per cent of the UK’s business rates bill.“This damaging and outdated business rates system, which drives up the cost of doing business, is a major factor in store closures as well as hindering the successful transformation of our high streets.”Mike Cherry, national chairman of the Federation of Small Businesses, added, “Currently, the tax system favours big online companies over independent businesses based on the high street, which are already facing a tough trading environment.“The broken business rates system penalises firms, regardless of their profits or ability to pay. The new business rate discount coming into play in six weeks’ time should give some relief for smaller firms.“Long term, there needs to be a serious overhaul of the unfair tax that hits firms before they’ve had the chance to make their first pound of turnover, let alone profit."

Small businesses and government agree on importance of high street to economy and communities

Reacting to the report, High Streets Minister Jake Berry said, "We know high streets are the backbone of our economy and a crucial part of our local communities, and we want to see them thrive - both now and in the future."That's why the government has stepped up, putting a plan for the high street at the centre of the Budget, backed by £675 million cash investment to ensure that local high streets are able to adapt and thrive for generations to come and establishing a High Streets Task Force to support local leadership."And we're supporting small retailers too, slashing business rates by a third - building on more than £13 billion of rates relief since 2016."As the Chancellor made clear in the Budget, an online sales tax would be passed on to consumers."

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