HM Treasury rules out online sales tax

FireworksThe Sunday Telegraph says it has seen a letter from David Gauke, the Exchequer Secretary to the Treasury, ruling out an online tax.

The letter is in reply to the Managing Directors of six firms who wrote to warn the government that an online sales tax would be bad for the economy. Ocado, N Brown, Shop Direct, Boden, Appliances Online and notonthehighstreet.com bosses said a tax aimed specifically at online retailers would damage growth and stifle job creation.

Mr Gauke is said to have written:“The Government recognises that online businesses contribute to growth in the UK and supports continuing success in the sector. Many online businesses operate across international borders and it is therefore important to have international agreement on the principles of how multinational businesses, including online, are taxed.”

“However, we favour an approach which aims to ensure common principles apply to all businesses whether operating online, from physical premises or with a combination.”

“For this reason, we do not favour a specific tax targeted at the online business sector, although we aim to ensure that tax principles are developed which can be applied consistently across the economy.”

“This area is extremely complex; with large parts of the economy moving towards having some form of digital presence, it is important to ensure fair competition between digital and non-digital businesses.”

Several members of the British Retail Consortium including managers at Morrisons and Sainsbury’s called for an online sales tax earlier in the year to help the ailing High Street. At the time the BRC refused to rule out recommending such a tax to government.

But over the weekend, Helen Dickinson, BRC director-general, said: “The whole question of an online tax has had a lot of coverage but it’s not the place to start. It’s important that common principles should apply to all businesses – but the principles that apply at the moment are from a bygone age. Business rates in particular have long since ceased to be fit for purpose.”