Rishi Sunak considering online sales tax in bid to save high street shops

The UK Government is considering a new tax on goods sold online in the wake of the “significant” hit to the high street from COVID-19, according to a report in The Times.

The tax would help high street shops compete with online retailers, who have fewer overheads.

It comes after the Treasury highlighted concerns in a call for evidence last week that business rates were harming the high street because online rivals did not need to rent “high-value” properties.

A Number 10 spokesperson said: “Last week, as we set out in the budget and manifesto, we published a call for evidence to look into all aspects of the business rates system. 

“And as part of this we will consider the case for introducing alternative taxes as part of the review, including an online sales tax.

They continued: “The pandemic has had a significant impact on how business is done and the effect of this will become clearer over time.”

“We’ll continue to support businesses as far as possible, but we must also ensure that the tax system raises sufficient revenue to fund our vital public services.”

According to The Times, other plans being considered include replacing business rates with a ‘capital values tax’, which would be paid by the owner of a property instead of the business leasing it, and a set charge on consumer deliveries aimed at reducing congestion and encouraging high street shopping.

Businesses in the hospitality and leisure sector were given a one-year business rate holiday by the Chancellor during the height of the pandemic, which will reportedly cost £10bn and has led to a 40 per cent drop in tax revenue from businesses rates.

The UK Government is currently facing a hole in the public finances of more than £322bn as a result of the economic downturn and measures brought in to support the economy.