Online sales tax will 'damage high streets', warns retail giant

Marks & Spencer has written to the Chancellor Rishi Sunak warning that an online sales tax would damage the High Street as a three-month government consultation on whether to introduce the same is closing on Friday (20).

M&S believes a new online tax would "punish" the very retailers it plans to support and leave them less money to invest in High Street stores.

"Introducing an additional tax on retail - already overburdened - will simply mean retailers cut their cloth accordingly," BBC quoted the chain's chief financial officer, Eoin Tonge, as saying, who added that traditional retailers have worked hard to diversify and grow their online sales and such a tax would make it harder for them to invest in what is needed to survive and grow in the modern, digital era.

"This rationalisation will always start with the least profitable parts of a business - which, in the case of multi-channel retailers, will more often than not be High Street stores," said Tonge.

"Therefore it is likely that, far from helping the High Street, an online sales tax will damage shops and our high streets further, particularly in areas that require new investment to bring them back to life,” he said.

High Street retailers have been complaining for years about the soaring cost of business rates- a property based tax, claiming that they tend to pay far higher rates than online rivals who do not have stores to run.

Despite widespread calls for a revamp, the Treasury decided last year there was no case for fundamental change. However, it promised to look at an online tax, saying that the proceeds would go towards funding a reduction in business rates for shops.

Tonge’s statement comes a few days after it was revealed that some of Britain's biggest retailers, including Tesco, Sainsbury's, Gregg's and Morrisons, recently joined forces to launch a "Cut the Shops Tax Campaign" urging the government to reduce business rates to help mitigate rising costs and keep shops open.

They also said they'd be "open" to an online sales tax if it funded a reduction in rates to help create more of a level playing field.

Meanwhile, a survey last month indicated at overwhelming support for online sales tax among retailers.

According to property firm Colliers, while a whopping 89 percent were in favour of some form of online sales tax, just 11 percent of respondents said they did not support an online sales tax.

About 54 percent agreed that items that are sold online but delivered via click and collect should be subject to additional charges, shows the survey’s findings.