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Tesco CEO Lewis calls for 'Amazon tax' on online sales

The most prominent retail industry voice yet has called on the UK government to introduce a tax on online sales.

Tesco CEO Dave Lewis told The Mail on Sunday that UK chancellor Philip Hammond should impose a 2% charge – dubbed an ‘Amazon tax’ – on goods sold online, with the money raised put back into reducing the burden on the wider industry.

2018 has seen the likes of Toys R Us, Maplin and Orla Kiely collapse into administration and businesses such as New Look, Carpetright, and Mothercare reduce their store portfolios as part of major CVA restructuring plans, and Lewis acknowledged traditional retailers are challenged by rising costs, taxes, higher wages and competition from fast-growing online firms.

“Three years ago I talked about a potential lethal cocktail of pressures in the retail industry and now you are seeing that come to fruition,” Lewis told the newspaper.

“The tax burden has reached the point where companies are going bust. Has the government thought through what happens when retail starts to decline and if the job losses start to become significant?”

Lewis admitted that Tesco, which itself has a significant and burgeoning online operation, would “without doubt” benefit from a so-called Amazon tax, but suggested his supermarket rivals – which have smaller online sales figures – “would get a much better deal out of this than I would”.

Theo Paphitis, who runs Ryman, Boux Avenue and Robert Dyas, and Pets at Home CEO, Peter Pritchard, are among the industry leaders that have recently called for an Amazon tax on online sales, but Lewis’s voice could have greater influence in government circles.

Calls for changes in the UK come after a move by the US Supreme Court in the summer saw a decades-old tax ruling that has enabled many eCommerce players to avoid sales levies overturned.

Previously, the ruling required organisations to collect sales tax from customers if their business had a physical presence in the state, which meant the likes of Amazon and online furniture player Wayfair could be more competitive on price.

But in a case between South Dakota state and Wayfair on sales tax, the court sided with the state, paving the way for other parts of the US to begin collecting taxes from online purchases.

It overturned another state versus retailer ruling – the 1992 Quill vs. North Dakota case that instructed states could not collect sales tax from retailers who do not have a physical presence in their territory.