Online sales tax to save high street deemed illegal under EU rules

The prospect of an online sales tax look to have been killed off due to European Union rules and regulations. The UK government overruled by Brussels, yet again.

The idea put forward was intended to help high streets compete on fairer terms, with Tesco’s Chief Executive suggesting a 2% tax on sales and the owner of Sports Direct, Mike Ashley, suggesting a charge applied to retailers who have more than 20% of sales online. Mike Ashley has been one of those making clear that without urgent action, the UK high street will continue to die.

As an example, Amazon pays around £60 million in business rates in Britain, but has retail sales of more than £8 billion. That compares to Debenhams and Next who each paid £80 million in business rates last year on UK revenues of £2.3 billion and £4.1 billion respectively.

Sir John Timpson, a retailer and government adviser, has told Parliament previously that “it is quite clearly the right thing for government to do, to level the playing field between bricks-and-mortar retailers and internet retailers”.

But The Times has learnt that Financial Secretary to the Treasury, Mel Stride, has written that any move towards an online sales tax would have a “high risk” of breaching EU state aid rules.

Robert Hayton, of the Altus Group, has said: “Traditional bricks-and-mortar retailing is obviously property intensive.

“The reliance on property leads to a larger tax-to-turnover ratio that, if left unchecked, will contribute to the further deterioration of our high streets. If an online sales tax for large online retailers would be deemed unlawful, the government urgently needs to develop a coherent strategy to address the imbalance.”

The real problem is that even under Theresa May’s proposed deal, the government has accepted ‘dynamic alignment’ of the EU on state aid rules, killing off the opportunity to make radical changes. Once again, a clean, WTO Brexit that gives the UK full autonomy looks increasingly appealing.

As Brexiteer businessman Richard Tice tweeted: “Another classic example why PM’s deal is as bad as staying in EU….let’s Go WTO and be free to save our high street.”

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Utterly bonkers that so many still want to keep the UK tied to EU rules, including socialists in Jeremy Corbyn’s party who would surely welcome a move to save Britain’s high streets.