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New West End Company proposes new online retail tax

A revenue-based tax for businesses wholly or mainly based online would help level the playing field between eCommerce and bricks and mortar retailers, according to proposals put forward on 6 July by the New West End Company (NWEC).

The group which represents 600 retailers across London’s West End region has called on the government to introduce this business rates reform which it says would reduce the perceived inequality that currently exists between the digital and physical retail worlds.

NWEC said the extra money raised through such a scheme could be used to reduce the rates burden for other businesses, which are finding it increasingly difficult to survive under current terms. So far in 2018, it has been the year of the company voluntary arrangement, with retailers such as Carpetright, House of Fraser and New Look following this route to help reduce their store estates and consolidate costs in what are challenging times for high street businesses.

According to New West End, a 1% tax on online business revenues could raise £5 billion each year, at no extra cost to the Treasury.

Sir Peter Rogers, chairman of New West End Company said: “Business rates are currently the biggest tax that high street retailers pay, accounting for nearly half of retailers’ tax bill.

“The current structure of business rates, whereby they are linked to the value of occupied property, not economic performance, provides online retailers with an unfair advantage and a 90% rate discount in an already struggling bricks and mortar retail environment.”

On Wednesday 4 July, the British Retail Consortium (BRC) called for a two-year freeze on business rates increases to provide some relief for the retail industry, with the trade association saying the current system is "unsustainable".

It said the retail industry makes up 5% of the economy and pays nearly 25% of the overall business rates bill, totalling more than £7 billion per year. The BRC called it a “disproportionate burden” which is leading to many decisions by companies to close stores and preventing necessary modernisation of Britain’s high streets.

Calls for a levelling of the playing field between online and physical retail come after the US Supreme Court, last week, overturned a decades-old tax ruling that has enabled many eCommerce players to avoid state sales levies if they do not have a physical presence in that territory.

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