Many oppose government’s Online Sales Tax proposals

With the recent closure of the government’s consultation for an Online Sales Tax (OST), many are opposing these proposals.

The government says the main policy aim behind an OST would be to ‘rebalance taxation of the retail sector’ between online and more traditional physical retailers such as those in high streets. To achieve this, the revenues from any online sales tax would be used to reduce business rates for ‘bricks and mortar’ retailers.

Explaining their reason behind disagreeing with the OST, Gabby Donald, Chair of CIOT’s (Chartered Institute of Taxation) Indirect Taxes Committee, commented, “Designing and implementing a brand-new tax to remedy perceived unfairness in the business rates regime is a disproportionate way of addressing the challenges facing the high street. It is better to modernise the business rates system – something that is long overdue.

“You cannot overestimate the complexity of introducing a tax that requires all transactions to be deemed in or out of its scope, especially where borderlines exist such as goods versus services, business versus private consumers, and the nature of any exemptions or special rules.”

The ATT (Association of Accounting Technicians) believes that the OST could potentially stifle the upward trend of the rising popularity of online retailers at a cost to consumers, businesses and the wider economy.

Phil Hall, Head of Public Affairs and Public Policy, AAT, said, “The government consultation puts forward a very vague idea of introducing a new tax in limited circumstances, with limited applicability, that it will not replace business rates but may help reduce them for some retailers in unspecified circumstances – all in the hope of partially addressing the fact that businesses that mostly operate online appear to pay less in business rates than ‘bricks and mortar’ competitors.

“However, recognising that many retailers now sell both online and offline, the impact of an OST is likely to be broadly negative for most UK retailers.

“The high degree of uncertainty around these proposals makes it difficult even for the most passionate proponents of an Online Sales Tax to support these proposals.”

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