Rishi Sunak is eyeing an online sales tax again as a way to make things fairer for high street retailers forced to pay much higher business rates compared to tech behemoths.
Treasury officials have their heads down at work on a new online sales tax, figuring out which goods and services would be covered, according to the Daily Telegraph.
The online sales tax might actually involve two new taxes: a levy on all goods bought online and a tax on consumer deliveries.
However, nothing is going to be announced in this month’s Budget on October 27, as the Chancellor has already kicked reform of business rates into the long grass – again – saying he needs more time to untangle this knotty problem.
Any digital sales levy would be unveiled in the spring.
Online retailers thrived during the Covid-19 lockdowns with people unable to visit non-essential shops for three months.
Even with the easing of restrictions, footfall on the high street has been patchy, with many people still nervous about shopping in crowded retailers.
The idea of a digital sales levy was first mooted by Philip Hammond when he was Chancellor, and a previously suggested 2 per cent rate would generate around £2bn.
Business rates, which generated about £25bn a year for the Treasury before Covid, are a property tax linked to the underlying value of commercial premises. Present rates are based on property values dating back to 2015, which do not reflect a sharp decline in the value of high street shops and shopping centres after the rise of online shopping and the impact of Covid-19.
The tax bears no relation to the trading performance of a shop and penalises bricks-and-mortar outlets over online retailers.