Will online shops be hit with a new 2% Amazon tax?


REVEALED: Minister’s slip that has experts asking… Will online shops be hit with a new 2% Amazon tax?

Neil Craven for The Mail on Sunday

High street Minister Jake Berry has told MPs that the Government is considering a ‘2 per cent tax on online retail’ – prompting experts to speculate on the possibility of a new Amazon tax.

The launch of such a levy would represent a major shift from the Chancellor’s position at the October Budget. 

Philip Hammond’s announcement of a Digital Services Tax disappointed town centre retailers because the 2 per cent charge fell short of taxing online retail giants such as Amazon and would only hit social media firms and search engines.

But in what was either a slip or an indication of the Government’s plans, Berry last week appeared to suggest that the tax could be extended to include online stores.

The Government is considering a '2 per cent tax on online retail', High street Minister said

The Government is considering a '2 per cent tax on online retail', High street Minister said

The Government is considering a ‘2 per cent tax on online retail’, High street Minister said

Berry is the Minister for the Northern Powerhouse and local growth, which includes high streets.

During a parliamentary session in the House of Commons to discuss help available for beleaguered shops, he stated: ‘The Government have been clear that online taxation in retail needs to be done as part of an international agreement, but we have also been clear that, if we cannot get such an agreement, we will come forward with our own 2 per cent tax on online retail to ensure that we can continue, as we did in the last Budget, to give relief to those retailing on our high streets.

‘This year we have already slashed a third off business rates of shops with a rateable value of under £51,000.’

Berry gave the response to a question from Liberal Democrat MP Tim Farron, who said: ‘The Government’s plans for a puny 2 per cent digital tax on mega online firms that avoid paying their fair share is an insult to shops on the high street in towns such as Grange, Windermere and Kendal.

‘Will he [Berry] support higher taxes on tax dodgers, which would raise enough money to slash business rates for our town centres and help to save our high streets?’

Jake Berry is the Minister for the Northern Powerhouse and local growth, which includes high streets

Jake Berry is the Minister for the Northern Powerhouse and local growth, which includes high streets

Jake Berry is the Minister for the Northern Powerhouse and local growth, which includes high streets

Berry’s department, the Ministry of Housing, Communities & Local Government, declined to retract his statement when contacted by The Mail on Sunday.

Only a month ago, Berry flatly ruled out an online sales tax to a Commons committee, saying such a levy would be ‘passed on to consumers’ in the form of higher prices.

Altus Group’s Robert Hayton said the Minister’s commitment appeared to be ‘unequivocal’. He said a clarification of the position at the spring statement would avoid ‘further deterioration of our high streets’.

A source said the Government’s position had not changed.

The Government has repeatedly refused to be drawn into committing to an online sales tax despite growing pressure from retailers operating shops on the street.

In October, Tesco chief executive Dave Lewis called for a £1.25billion tax on products sold via the internet – dubbed an Amazon tax.

In an interview with The Mail on Sunday, Lewis said Hammond should impose a 2 per cent charge to help ‘shift the burden of raising the country’s income’ away from store chains.

He said: ‘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. The tax burden has reached the point where companies are going bust.’

 

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