The United Kingdom may immediately need an online sales tax.
According to several reports, Chancellor of the Exchequer Rishi Sunak is considering plans to tax online retailers in an effort to raise 2 billion pounds (about $ 2.5 billion) per year to the British government and help reach the brick and mortar business.
Last week, the British Ministry of Finance opened a ask for proof when reviewing the business tariff system imposed on the brick-and-mortar business. Under the current system – which came into force in the 90s – around two billion stores, offices and factories are taxed based on the rental value of their posts.
Currently trying to restructure the system, the Ministry of Finance is considering adding taxes to online retailers to fund tariff reductions for brick and mortar stores. They are also considering restructuring their tax system to impose levies on property owners, not on occupation businesses.
Those who support modifying the taxation system say that the current system supports e-commerce platforms – and injures shops that occupy high-value locations on high streets. Meanwhile, those who oppose online sales tax argue that it will result in price increases for consumers or make it difficult for new retailers to establish their e-commerce presence.
Over the past few years, the UK brick-and-mortar sector has faced pressures stemming not only from high levels of taxation but also from high fixed costs, slow sales growth, high price competition and rising e-commerce – the last of which has accelerated amid the coronavirus crisis. In 2019, British highways witnessed the highest rate of job cuts in 25 years, with more than 143,000 people losing their jobs, according to Retail Research Center. For 2020, the agency estimates 235,704 people will lose their jobs. It also expects 20,622 stores to shutter throughout the region, up from 16,073 in 2019.
Since the coronavirus crisis escalated in mid-March, forcing insignificant retailers to temporarily close these doors in Britain, many thick chains face a struggle. Over the past few months, Oasis and Warehouse and Debenhams have both appointed administrators, while Laura Ashley has fallen into bankruptcy. Meanwhile, many chains have made the decision to cut some of their workforce, including Ted Baker, Marks & Spencer, John Lewis and Harrods.
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