MPs want tax changes to support high street retailers

MPs are backing changes to the tax regime to halt the current decline in high streets and town centres and allow them to flourish in the future, which could include reforms to business rates, a new sales tax and ‘green taxes’ on packaging and deliveries

A report published by the housing, communities and local government select committee calls on the government to initiate reform in key planning and taxation areas, including the options of an online sales tax and reforms to business rates, to allow high streets to adapt to changing demand, and compete with online retailers such as Amazon on a level playing field.

Clive Betts, chair of the committee, said: ‘The growth of online shopping has profoundly changed retail in the UK, and the knock-on impact on high streets has been stark.

‘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 committee’s report says high street retailers are paying more than their fair share of tax, while online retailers are not contributing enough. Its evidence sessions heard that Amazon UK’s business rates amounted to approximately 0.7% of their UK turnover, while high street retailers are paying considerably more, with business rates as a proportion of turnover ranging from 1.5% to 6.5%.

The report notes the government has announced the introduction of a digital services tax in April 2020 to address issues related to historic avoidance of corporation tax but says this does not address the imbalance between online and high street retailers.

The committee’s recommendations are for the government to urgently assess a number of proposals, including a sales tax, an increase in VAT, an online sales tax and ‘green taxes’ on deliveries and packaging, and to make recommendations for change to provide fast relief to high street retailers.

The revenue raised should be used to support high streets by reducing business rates for retailers based there; a 12-month holiday for high street retailers from rates increases which result from investments to improvements in property; and an increase in the funding available to local areas through the future high streets fund.

High streets and town centres in 2030 report is here.