Retailers fear ministers could abandon online sales tax and rates reform

Some of Britain’s most senior retail executives will hold talks with a Treasury minister this week amid industry concerns that the government’s appetite to introduce an online sales tax and reform the decades-old system of business rates is fading.

Sky News has learnt that bosses from companies including Amazon, Asda, ASOS, Currys and JustEat Takeaway will meet Lucy Frazer, the financial secretary to the Treasury, on Wednesday to reiterate calls for a fundamental overhaul of the rates regime.

A consultation on the launch of a tax on digital sales closed last week, and the divergence of opinions within the retail sector has fuelled concerns among its advocates that the government will use that disagreement as an excuse to abandon the plan.

Industry figures believe there is broad agreement across both online and predominantly physical store-owners that business rates need urgent and radical reform, with the Retail Jobs Alliance (RJA) – a new grouping whose members include Kingfisher and Tesco – understood to be behind research showing that a reduction in rates for all retailers would result in a tax cut for 197,000 shops across the country.

The RJA, which launched last month, wrote to Rishi Sunak, the chancellor, to “make the case for an overall cut in business rates for all retail premises, [which] we are open to funding… through the introduction of a new online sales tax”.

Other RJA members include Greggs, J Sainsbury and Waterstones.

This week’s meeting with Ms Frazer follows a years-long debate about the balance between the taxation of physical and online retailers as consumers increasingly shift to digital channels.

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In February, the Treasury launched a consultation on the merits of an online sales tax in the wake of a business rates review that it claimed would save companies £7bn.

“Whilst we’ve made no decision on whether to introduce such a tax, 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”, Lucy Frazer, financial secretary to the Treasury, said at the time.

This week, the respected think-tank the Centre for Policy Studies will publish a report that is expected to be highly critical of the proposals for an OST.

The CPS report is understood to have been put together with the backing of Coadec, an association which promotes the digital economy.

Among those expected to attend Wednesday’s meeting are Jason Tarry, Tesco’s UK and Ireland CEO; Mathew Dunn, ASOS’s finance chief; John Boumphrey, Amazon’s UK country manager; and Alex Baldock, Currys’ chief executive.

The Treasury declined to comment, although an insider insisted the government had not yet decided whether to introduce a tax on online sales.

In their letter to Mr Sunak last month, the members of the RJA said: “A meaningful cut in the Shops Tax would make a big difference to retailers’ ability to invest more in the shops and stores that we know customers value, as well as to create jobs.

“This would make it easier for everyone in the retail sector to mitigate inflationary pressures, keep existing shops open and open new ones.”

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