Phillip Hammond, Chancellor of the Exchequer, was in the news back in March for threatening tech companies with extra taxes - because they still manage to get away with paying almost nothing. That was a threat that originated in the Autumn budget last year, and still nothing seems to have come to fruition. Now he's back at throwing around threats of extra taxes, except this time he's targeting online retailers.
A threat is only any good if you're able to follow through with it, and given Hammond's track record it's probably not much for retailers to worry about anytime soon. That said this new idea has come about to try and save the high street in the wake of House of Fraser collapsing into administration and becoming House of Sports Direct. Because online retailers obviously need to be punished because brick-and-mortar stores haven't bothered to adapt to consumer needs.
But Hammond brought that point up too, emphasising that high street retailers did need to reform and meet the demands of the shoppers.
“We’re changing our shopping habits. More and more of us are buying online. Indeed, Britain has the biggest percentage of online shopping of any major developed economy. That means the high street will change.”
He mentioned that it would likely end up with a decline in retail locations, and a rise in more leisure-like activities such as bars and community facilities. Or, here's a thought, we could turn some of that incoming defunct land into houses and flats. That's what's being done to the now-dead Toys R Us and Homebase near where I live. We need more affordable houses, retailers don't need premium town centre property any more, it's a win-win.
Hammond wouldn't comment on changing business rates, but he wants to introduce extra taxes for online businesses since they tend to pay less than their high street counterparts anyway.
“We want to ensure that taxation is fair between businesses doing business the traditional way and those doing business online. That requires us to renegotiate international tax treaties because many of the big online businesses are international companies.
If we can’t get international agreement to do this we may have to look at temporary tax measures to rebalance the playing field until we can get international agreements.”
When pressed for details he mentioned that “the EU has been talking about a tax on online platform businesses based on value generated. That’s certainly something we’d be prepared to consider.” [HuffPost UK]