Blog TraffCloud

UK Government to consider an online sales tax

The UK Government has begun a consultation accepting arguments for and against an online sales tax. If introduced, it would be revenue-based and would be used to fund a reduction in levies for the many brick-and-mortar retailers of the UK.

Such a tax even set at 1% could be thought to raise about $1 billion each year, as laid out in the initial statement from the Treasury.

Lucy Frazer, financial secretary to the Treasury, said: “We want to see thriving high streets and a fair economy.
“It’s right that, given the growing consumer trend to shop online, we work with stakeholders to assess the appropriate taxation of the retail sector.”
Since online shopping continues to grow year on year, many high street stores have complained that they have had to pay business rates based on the value of the brick-and-mortar outlets they use, a system that favors Internet trades.

Therefore, this online sales tax would be put towards funding business rates relief. The consultation invites opinions on key factors such as which of the many goods and transactions in the retail sector the online sales tax should apply to, in addition to whether it should be applied to B2B commerce and intermediary vendors.
The consultation is expected to last three months.