Amazon saw sales in the UK increase by 51% to almost £20b last year as consumers relied heavily on online shopping during the pandemic.
The Sunday Times has reported that the chancellor is considering targeting companies who have cashed in during the coronavirus crisis, according to Treasury sources. Plans are reportedly being considered for an ‘excessive profits tax’ on companies which have seen a spike in profits such as Amazon, which saw sales in the UK climb by 51%. Online retailers, food delivery firms, supermarkets and parcel delivery firms could be also be subject to a one-off Covid ‘windfall tax’.
A Treasury spokesman said: “Our business rates review call for evidence included questions on whether we should shift the balance between online and physical shops by introducing an online sales tax. We’re considering responses now.”
The comments have reopened the debate on how to fairly tax retailers.
Former minister Tobias Ellwood has urged the government to make Amazon and other internet giants ‘pay their fair share’, warning that high streets were being emptied of shops, while Amazon paid ‘derisory amounts of tax’. He said: “The task may be daunting. But what better time than now, when governments seeks ways to repair the huge economic damage caused by coronavirus?”
Chief executives from 18 businesses, including Morrisons, Asda and Waterstones, have written to the chancellor demanding a level playing field when it comes to tax. The retailers say the current system puts those with large estates at a disadvantage to their online competitors. Tesco CEO Ken Murphy has gone a step further and supported a 1% sales tax be levied on online competitors.
However, British Retail Consortium chief-executive, Helen Dickinson, has urged ministers not to stifle businesses recovering from impact of the pandemic. “The key to reviving our high streets is fundamental reform of the business rates system and we oppose any new taxes that increase the cost burden on the industry which is already too high,’” she said. ‘Economic recovery after Covid will be powered by consumer demand; the chancellor should ensure he doesn’t introduce any new taxes that stifle this.”
Retailers have not had to pay property-based business rates since the start of the pandemic, but the tax is due to restart in April. A budget is expected on March 3rd, when Rishi Sunak is expected to review the furlough scheme and the business rates holiday period. The delegation believes that a return to the old business rates system “will hamper the recovery of the retail sector post-pandemic, potentially putting thousands of jobs at risk”.
Amazon has defended its business model, saying that it pays its tax and has created thousands of jobs in the UK.
A Treasury spokesperson said: “We want to see thriving high streets, which is why we’ve spent tens of billions of pounds supporting shops throughout the pandemic and are supporting town centres through the changes online shopping brings.”