Chancellor exploring 'Amazon tax' to level playing field for retailers

Chancellor Rachel Reeves is exploring plans to impose higher taxes on Amazon in an effort to level the playing field between in-store and online retailers and support Britain’s ailing high streets.

As part of a wider shake-up of property taxes, the Chancellor is believed to be considering increasing the business rates paid by online tech giant, The Telegraph reported on Tuesday (22).

The report states that as part of a review of how business rates are set, Reeves could scrutinise how much Amazon’s warehouses pay in tax compared to high street stores. It comes as retail bosses have also urged the Government to impose new levies on deliveries.

It comes as the Chancellor prepares to announce a series of tax rises and spending cuts in an attempt to plug what she claims is a £22bn black hole.

The Government has also announced plans to overhaul the business rates system, claiming in its manifesto that it wanted to “level the playing field between the high street and online giants”. It said the current system “disincentivises investment, creates uncertainty and places an undue burden on our high streets”.

Business rates are calculated based on the value of a company’s property, which can often be located in a prime city centre location, unlike an out-of-town business park, where many warehouses are located.

According to Altus, a real estate intelligence company, retailers with physical stores currently spend around 2.6 per cent of their turnover on business rates, before any reliefs. Large online-only retailers, meanwhile, spend around 0.45 per cent of their revenues on taxes.

Andrew Goodacre, the chief executive of the British Independent Retailers Association, said an overhaul of business rates to help the high street “would be very welcome because online businesses managed to convince the previous government that the online sales tax was unworkable”.

However, the British Retail Consortium (BRC) called for caution, saying the sector as a whole was paying “more than its fair share”.

Tom Ironside, the director of business and regulation at the BRC, said, “These problems cannot be resolved by pushing business taxes from one bit of retail to another. If the Treasury seeks to keep any challenges cost-neutral, it should look outside of retail.”