MINISTERS should slap a new online sales tax on internet retailers to save Britain’s embattled high streets, a powerful group of MPs has said.
The Commons Local Government committee said town centres face being closed down altogether unless politicians launch a radical overhaul of business taxes.
The report lays bare the “dated policies and unfair tax regimes” currently plaguing high streets.
It found business rates make up just 0.7 per cent of Amazon’s UK turnover whereas town centre shops pay a rate of between 1.5 and 6.5 per cent.
Chancellor Philip Hammond announced a ‘Digital Services Tax’ to be slapped on the likes of Facebook, Amazon, Apple, Netflix and Google – but the committee wants him to go further and consider a specific tax on all online sales to “level the playing field”.
As well as an overhaul of business rates the MPs called on the Government to consider a hike in VAT for purchases over the internet and a new green tax on delivery and packaging.
The committee said the proposals could ensure high streets and town centres “flourish” in the future.
The cross-party group of MPs also suggested local retailers do more to offer the personal interaction that the likes of Amazon cannot.
LEVEL THE PLAYING FIELD
Online sales currently make up one in five of all purchases but without action this ratio will only grow and make town centres look “increasingly bleak,” the committee warned.
They called on the Government, councils, retailers, landlords and the local community act together to implement their recommendations.
Chairman Clive Betts 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 focal points of our communities comprising green space and health, education and leisure services, as well as a core of retail.”
The Local Government Association backed the plans and called on councils to be more flexible with planning rules to help “shape and deliver vibrant town centres”.
The Federation of Small Businesses chief Mike CHerry said: “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.
“We welcome the report’s call for fast action to level the playing field.”
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.
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“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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