Retailers regroup to call for online sales tax

By Chris Dawson September 20, 2013 - 8:00 am

Say No to Online Sales TaxWe thought we’d heard the last of an online sales tax when the treasury ruled it out saying “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”. It’s back in the papers though.

Former online Dragon, Theo Paphitis is quoted in today’s Evening Standard as saying Business Rates are “no longer fit for purpose” and should be replaced with a 2% sales tax on shopkeepers and “tax-avoiding online retailers”. He added “You wouldn’t have to bitch about Amazon any more”.

The aim according to the Evening Standard article is to balance a reduction in tax on small retailers with an increase from online distributors. Where it falls down is that once again it’s aimed at tax avoiding corporations domiciled overseas and forgets about the thousands of small online retailers who pay business rates on their warehouses, VAT, Income Tax and National Insurance and have the added expense of courier deliveries (and yes you’ve guess it, online retailers almost certainly pay VAT on their courier invoices too!).

There’s no question that Business Rates are high, too high in many cases for smaller retailers to profit on the high street. A bit like the British Retail Consortium (BRC) members who earlier this year were also claiming to love the small independent retailer and claiming an online sales tax would be good for them and that without Business Rates they’d be able to return to the high street.

It would be wrong of me to suggest that the people that would benefit most are the BRC members and people like Theo Pahpitis who owns the Ryman high street chain, the Boux Avenue high street chain and the Robert Dyas high street chain.

  • Ross
    4 years ago

    A general direct taxation across the board would not be a terrible idea. Not sure any government is going to sanction what would effectively be raising VAT even if other charges disappear.
    Business rates certainly need looking at. Many councils raise business rates on existing businesses to cover the money they are missing out on on closed shops. Thus forcing more shops to close, and the decreasing circle goes on.

  • Lee Pearce
    4 years ago

    As an online retailer who has a B&M shop on the high street, my little idea is to reduce Business rates and pay for it by scraping the VAT threshold.


  • 4 years ago

    There is certainly a good justification for looking at Business Rates. Why for example does a huge Supermarket doing many millions of pounds a year in business pay less, much less, than a small shop barely paying its way pays per square foot of sales space?

    The reason is actually very simple. Business rates are calculated not on the total square foot of the shop or store but on bands within the shop. The frontage and so many feet behind the shop pays the most. Then there are strips across the shop that pay progressively less business rates per square foot. So a Supermarket for much of its sales area is actually paying very little business rates per square foot. While a small shop is all in the highest rated area and so averaged out pays far more Business Rates per square foot than the Supermarket.

    I would argue that Tesco, Sainsburys, Morrisons etc should be paying the very highest Business Rates per Square Foot over the whole of their selling space while the small shop should be paying a much lesser amount reflecting the fact that it does much less business per square foot.

    Obviously the large companies such as Tesco who were supporters of the On Line Tax idea will not like this but so what. The onward march of the large Supermarket is behind much of the problems on the High Street at present. Certainly long before On Line Trading made its appearance the Supermarkets were causing the wholesale closure of small shops on the High Streets everywhere.

    I actually like B & M shops. I like to browse around their stock. But as they have closed in large numbers over the years High Streets have changed and not for the best. Often they are a mixture of Charity Shops, Payday Lenders and Gambling Dens today. I want to see real shops once again but this is never going to happen while the rents are so high, the Business Rates are so high and the Councils keep pushing up the Car Parking fees to crazy prices. Even then it is doubtful if the High Streets will ever really recover.

    • Cambridge_Blue
      4 years ago

      So it is all the fault of the large supermarkets now is it?
      Utter garbage as usual and the fact that so many people use them quite happily is proof enough of their business model.
      Supermarkets are not the problem and neither are Councils, business rates or rents.
      Put simply crap shops selling things people don’t want (e.g. secondhand books) or who couldn’t compete have simply been driven out of business and rightly so.
      The High Street was clearly over shopped and we were long overdue a good clear out.
      Your explanation of how rateable valuations between businesses are calculated seems interesting to say the least – I thought it is based on rateable value for the entire rateable property so where do ‘bands’ in a shop come into it?
      God Bless ‘Tesco’.
      pip pip

    • 4 years ago

      As usual Cambridge_blue comments about a subject that he knows nothing about. There are many out there that have different interests to him. His interests maybe those of the majority but it does not mean that those who have minority interests should be driven from the High Streets. The trouble is that with his very limited intelligence he will not accept that others have a point of view and interests that are just as valid, indeed possibly more valid than his.

    • Cambridge_Blue
      4 years ago

      I am proud to admit that ‘I know nothing!’.
      What I challenge is not your minority interests but your complete inability to construct any reasoned or logical argument.
      You just peddle the usual emotionally based claptrap and blame others (e.g. supermarkets) for problems on the high street for example.
      Shops selling remaindered copies of railway steam cranes are not being driven from the high street – they have ceased to exist because no one wants to buy this stuff and people can’t make a living doing it from a shop.
      As usual you blame everybody else for these problems when it is consumers who are voting with their custom and money pure and simple.
      Independents will and do prosper where they meet a real consumer need on the high street and locate themselves in the right place.
      Just look at all the shops selling complete crap to the visiting grockles down where you live where ripping off the tourist is still a true cornish craft industry.
      We arguably still have too many retail properties in many towns and villages as well and they will have to change their use sooner rather than later.
      In other words it has little ot nothing to do with rents, business rates, parking charges, supermarkets or even your Council and everything to do with changing consumer shopping preferences which are structural and not transient.
      But then it would be a miracle if you could ever come to terms with the hard economic realities of business in 2013 rather than living in your pleasant fantasy world down there in Cornwall.
      God Bless ‘Manuel’,
      pip pip

    • 4 years ago

      I know that Cambridge_blue will probably not appreciate this but might I suggest that he goes to the top of this subject and read the original story again(that is if he read it originally – which I doubt)

      Former Dragon, Theo Paphitis said that Business Rates were no longer fit for purpose. He suggested that they should be replaced by a 2% Sales Tax which would affect not only B & M Shop-keepers but also Online Retailers.

      By saying that Business Rates were no longer Fit for Purpose surely he is agreeing with me that there are serious flaws in the current system which benefits the large supermarket greatly over the small shop.

      We of course already have a ‘Sales Tax’ its called VAT. To bring in another Sales Tax with different rules and no doubt collected by a different organisation seems to me to be an unnecessary duplication. However it would have important benefits.

      The most important would be that the huge Supermarkets doing many £millions of turnover per annum would pay their full amount of tax. The small shop doing a much lower turnover per annum. Indeed a much lower rate of turnover per square foot of selling space per annum would be paying the same rate of tax based upon turnover. So it would tend to even out the disadvantage currently suffered by the small shop.

      Indeed it would get rid of once and for all a problem with Business Rates. That is location. The High Street is traditionally the main selling area within the Town Centre. But in many Town and City Centres there are subsidiary Streets joining onto the High Street or running behind the High Street. These areas are not as attractive and see much less footfall. With a turnover based system it gets rid of the current fiction that Business Rates are based upon Rental Values which themselves are based upon the idea that within the Town Centre all shops are equally attractive places to trade from.

      By making the tax refer to online business as well it would mean that hiding behind being based in some foreign country would disappear. It would be applicable to every single pound of turnover within the UK. Any attempt to argue that a UK Warehouse supplying a UK customer was really a sale in some foreign land would automatically be illegal under the rules and regulations.

      Obviously there might be many who would argue about it being unfair on this or that basis. But surely overall it would be fair across the board.

      As I thought about the practicalities of such a Tax I wondered about ebay Sellers based in such as China and Hong-Kong. Also there would need to be a registration system for multiple id’s so that they could all be lumped together as one business.

      There would need to be some registration system for all online sellers with an annual turnover of more than say £2,500 per annum(to try to eliminate Mrs Smith selling the childrens redundant toys). This would mean that legally no registration and a turnover above this figure you could be prosecuted, fined and shut down.

      But the more I thought about the idea the more I liked it. However working on the basis that anything I liked Cambridge_blue is automatically going to dislike I expect him to launch an attack on the whole idea.

    • 4 years ago

      My insomnia has been cured.

    • Cambridge_Blue
      4 years ago

      This is unarguably the finest new taxation proposal yet seen in the early part of the 21st Century.
      It once again confirms that our finest ‘speak your brains’ still reside in Cornwall.
      Would you like me to call Red Ed or Gideon and put them in touch with you?
      God Bless ‘insomniacs’.
      pip pip

    • Peter King
      4 years ago

      As usual Chris T posts in mind numbingly tedious details about subject only he knows or cares about, relating to centuries past.

      I could of course be wrong, please tell me Chris T (do you really think you are Christ?).

      From your previous posts you have said you only sell on ebay and are not registered as a business seller.

      Is this still true ?

    • 4 years ago

      It is really insulting to even suggest that I am in any way connected to any christian cult. Don’t you know that religion especially somebody elses religion is or should be totally out of bounds. To even attempt to comment on anything to do with what you might suppose is my religion shows just how abysmally ignorant you are.

    • Cambridge_Blue
      4 years ago

      I thought most of the cornish like you were still paid-up members of an old cargo cult (aka the wreckers).
      Or was it the trainspotters?
      Anyway the only religion that matters here on Tamebay is the one dedicated to making money and for the avoidance of doubt it is called Capitalism not Socialism.
      God bless ‘pagans’.
      pip pip

    • 4 years ago

      Had you been following you would know that many moons ago I pointed out that I had only been a “trainspotter” for a short time back in the 1960’s. Yet every so often some clown like you brings it up again. Why don’t you just grow up?

    • 4 years ago

      Over the years I must have sold both Retail and Wholesale several £millions of Train Spotting Books. However selling them does not mean that I use them or indeed that I am a Trainspotter.

      I still sell them and indeed I can sell backnumbers of them going back to the late 1980’s for those who have built up a collection for historic purposes. But again selling them does not make me a ‘Trainspiotter’.

    • 4 years ago

      Going back many moons life on Tamebay was getting complicated. There were several people posting using the name ‘Chris’. It must have been very complicated for many as I found myself being attacked and even on occassions supported(I really do not like being supported. I like it being me against the rest). Sometimes I was being supported or indeed attacked over something that a different ‘Chris’ had said in their posting. So to try to simplify matters I added the letter T. So instead of being ‘Chris’ along with several others I was now ‘Chris T’

      It certainly was not done for religious purposes. It was done to save complications and confusion. Indeed surely had I wanted to make any form of Religious Statement(which I do not) I would not have used the name Chris T.

  • 4 years ago

    I’m rather of the opinion that we have too many shops premises in this country.

    • 4 years ago

      In some areas I would agree with you. But this is mainly because of the numbers of Shopping Developments over the last few years that have added greatly to the numbers present in the traditional Town Centres. This has certainly caused an over provision

      But there is a lot to be said for more specialist shops rather than just more of the chains. As an example when I was Wholesaling a few years ago there were numerous Specialist Bookshops. But these have mainly gone.

      I would go into the Specialist Transport Bookshops and I would sell them many Railway Books. Every shop would have a reasonable number of customers browsing the stock. Often they would have a long list of obscure titles that customers were trying to find.

      I would be able to help because I knew what various publishers were publishing what.

      You cannot do that online to the same extent. If you tried to search you would have to have some idea of the title or search just could not help.

      As an example a book on Steam Railway Cranes might have a title like ‘Heavy Lift’. Search for Steam Cranes and it would never ever find a title of ‘Heavy Lift’. Yet in a Specialist Bookshop the chances are that the Shop Keeper or Assistant would immediately know what you were looking for and if they didn’t then the next rep almost certainly would.

      So I would certainly support the idea of more Specialist Bookshops. Indeed I might even be tempted out of retirement and go back on the road(although I would struggle with my various health problems).

    • Cambridge_Blue
      4 years ago

      If there was an economic demand for specialist shops then they would still be on or off the high street somewhere.
      So if they are not there that is because nobody is interested in what they have to offer anymore let alone pay more for such specialised offerings.
      The high street is not dying it is simply changing to reflect modern living and consumer priorities and that is a good thing.
      Indeed many of these unwanted retail properties should be converted to accomodation so people can hopefully buy second homes or holiday homes even more affordably.
      God Bless ‘Mary Portas’.
      pip pip

    • 4 years ago

      As usual you post about a subject that you obviously know absolutely nothing about. Yet you expect us to take some notice of your infantile rantings.

    • Cambridge_Blue
      4 years ago

      I am very surprised that you are so prejudiced against infants since most of your ramblings would benefit from being written by a couple of infants as they would then make a lot more sense.
      God Bless ‘ranters’.
      pip pip

    • 4 years ago

      It is not that long ago when there were in almost every Town Centre a moderate number of Specialist Shops. On a Saturday when planning the weekly shopping trip often the location of a specialist shop determined where the whole shop was done.

      Cambridge_blue might be now reaching for his keyboard but I ask the others to think about it(Cambridge_blue is incapable of rational thought so he is by now tapping away on his keyboard).

      On the list of things that are wanted there are one or two that can only be obtained from a Specialist Shop. You know from experience that the only shop that stocks this item in Cornwall is in Bodmin.

      So you have to go to Bodmin or do without this item. But Bodmin has a reasonable range of the usual National Chains. So the rest of the shopping list can be bought in just about every town in Cornwall(the same probably goes for every County in the Country including Cambridgeshire)

      The trouble is that Cambridge_blue and his ilk have forced out the Specialist Shops. Now just about every town centre has the same names above the shop front each selling the same range of products as every other branch in the chain.

      So it does not really matter which town you go to do your shop because they each stock the sausages, baked beans, etc but with the closure of the specialist shop there is nowhere in Cornwall where you can buy the particular item that previously you had to go to Bodmin for.

      Cambridge_blue is very happy about this I regret it because it represents a great reduction in my freedom of choice.

      Will I be able to buy the same item online? Maybe. But previously when I dropped into the shop in Bodmin to buy it I would have had a chat to the Shop-keeper. Knowing my interest he might have shown me some new similar products and maybe I would have looked at them and bought them as well. Online I might be pointed in the same direction but there is no guarantee that I might buy them. After all I cannot have a really good look at them online. Also the Shopkeeper might be happy for me to play with it, examine it in detail, take it apart etc.

      So while Cambridge_blue is happy for every Town Centre to look the same with the same mix of standard chain shops just in a different order I regret the individuality and interest that has been lost by the driving out of the Specialists. I am not saying that he or I is right or wrong. But I have a more diverse range of interests than he does. I cannot get many of the items that I want in Tesco or similar large chains. Take Books. BBIP(British Books in Print) has listed about 600,000 titles. Tesco claim to sell Books and it is true that they have a handful of shelves with Books on them. But they are hardly a comprehensive collection. Indeed Waterstones and W.H.Smith in the average town centre have a moderate number of books on sale. But if you added the total stocks of every shop in the average Town Centre that claims to be a Bookshop it does not even equate to 5% of the titles listed in BBIP.

      Are the changes in the average High Street to be welcomed as Cambridge_blue seems to think? I would certainly disagree. I am old enough to remember when browsing in a Town Centre could be enjoyable because you stood a chance of finding little specialist shops and find interesting items in their stock. This has for the most part gone.

    • 4 years ago

      Many High Streets have changed and not for the better. Numerous Charity Shops, Betting Shops and Payday Lenders have moved into High Street Shops across the country. This cannot be a good thing.

      I would much rather High Street Shops were selling products that people wanted or were used for other constructive purposes. But we as a country have had a policy of driving costs up to crazy levels so that a large number of shops have closed because they were just not economically viable.

      This has always been a crazy policy.

    • Cambridge_Blue
      4 years ago

      What are you smoking down there in Cornwall!
      There is no policy by our ‘country’ to drive up costs you muppett.
      This is a free market system (actually not really given local planning controls and stupid councillors) and if retailers cannot trade profitably they go out of business or find somewhere cheaper to rent if they can.
      These betting shops & payday lenders you disparage are there pecisely because people do want them.
      Who are you to say that is not a good thing since many others clearly use these shops quite happily!
      God Bless ‘subsidised charity shops’.
      pip pip

    • 4 years ago

      Now Cambridge_blue comments on me smoking. I suffer from COPD(Chronic Obstructive Pulmonary Disease) this lung disease is incurable(except by a lung transplant) and is often fatal. So it once again shows his total ignorance to even suggest that I am smoking anything.

    • 4 years ago

      I am disappointed I did not get some childish attack on the fact that I suffer from COPD. This is often thought of as a Smokers Disease. But I am a lifetime Non Smoker(I did not do 20 a day for years and then give up-apart from perhaps a couple of cigarettes behind the bike shed when I was 14 I have never smoked) yet I have a smokers disease. Just as non-smokers can and do get Lung Cancer so non smokers can get COPD. The big difference is that the smokers lungs are full of tar and eaten away with other nasties from the tobacco my lungs should be relatively clean.

      Yet COPD limits greatly what I can do. Cambridge_blue has in the past critisised me for not selling and listing more. Sometimes it is a struggle to list what I do. Sometimes I can barely get up and down stairs and have to stop half way to get my breath back.

      The Doctors have suggested that I have COPD because I had Childhood Asthma-the only trouble with that is that I did not have Childhood Asthma. I had no problems with my breathing until about 1979 when I was 29 years old. Since then it has gone from bad to worse.

      So I do not like idiots like Cambridge_blue making snide comments about my health. I only hope that in years to come Cambridge_blue does not suffer with health problems because they are not fun and certainly not for idiots like him to make fun of.

  • DSR Slave
    4 years ago

    Wow…..Chris T I think it’s quite clear that Cambridge_Blue was joking about the smoking comment and there was no need to go into one about your health.

    Lets try and keep this forum on topic an stay away from meaningless ramblings.

    • 4 years ago

      Hear hear! Well said.

      We don’t like to press the moderate button on Tamebay, but we do have one.

      (Comment not directed at anyone in particular, so please ignore if it doesn’t apply to you)

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