The retail sector is now waiting to see if the Treasury decides to go ahead with an online sales tax, following a 12-week consultation that is now closed to responses. Over the past three months, retailers and others have been asked to share their thoughts on whether such a tax is appropriate and how it might work in practice.

In particular, the consultation considered which goods and services might be considered by an online sales tax – for example, whether it would include orders placed for collection as well as delivery – who would pay the tax, and whether cross-border sales should be included.

In its consultation paper, the UK Treasury said the tax was seen as a way to raise “revenue from the growing volume of online retail in the UK, with this revenue being used to fund a reduction in commercial tariffs for commercial properties”. He added: “It should be noted that a OST levied at 1% or 2% would not generate sufficient revenue to fully replace the business rates experienced by retailers.” A 1% tax would bring in around £1billion, the document says, while corporate rates would bring in around £25billion a year.

What are the retailers saying?

A survey of the UK retail sector, in which commercial estate agency Colliers surveyed its retail clients, found that 89% of respondents supported an online sales tax – including 100% of respondents without online presence, 71% of retailers already selling online, and 98% of retail business owners and investors.

Most (70%) said essential items should be exempt and small retailers should get a reduced rate (66%), while just over half (55%) wanted an exemption for web applications used in store, and 52% for digital products.

At the time, John Webber, head of corporate rates at Colliers, said: “While our survey is a snapshot of our retail customers, it provides some interesting insights. There certainly seems to be overwhelming support for introducing some sort of online sales tax to try to level the playing field and take all the burden of commercial tariffs off brick-and-mortar retailers. It is normal that we try to rebalance the system and create a more level playing field for everyone. But it’s also essential that any monies raised by an online tax are used directly to ease the burden of high rates on businesses and not go into a government black hole.

Tesco, Sainsbury’s, Morrisons, Kingfisher and the Co-op Group have reportedly formed a new group, the Retail Jobs Alliance, which has written to the Chancellor demanding that retail rates – which he describes as shops – be reduced, and funded in part by an online sales tax.

In their letter to Chancellor Rishi Sunak, they reportedly said: “We are all, like you, extremely concerned about the pressures on household budgets and the rising cost of living, and we all have a role to play in maintaining the low costs. as far as possible. Business rates – the shop tax – make up a significant portion of retailers’ overheads. A significant reduction in the Shops Tax would make a big difference in the ability of retailers to invest more in the shops and stores we know as customers. This would make it easier for everyone in the retail sector to mitigate inflationary pressures, keep existing stores open and open new ones. »

But Marks & Spencer has also reportedly written to the Chancellor warning that an online sales tax would hurt the high street, making it harder for retailers to invest in growth in the digital age. M&S chief financial officer Eoin Tonge reportedly said: “The introduction of an additional retail tax – already canceled – will simply mean that retailers cut their fabric accordingly. This streamlining will always start with the least profitable parts of a business – which, in the case of multi-channel retailers, will most often be high street stores. Therefore, it is likely that, far from helping the high street, an online sales tax will further hurt stores and our high streets, especially in areas that need new investment to bring them back to life.

The idea of ​​a tax on online sales has been considered for the past few years, but decisions have already been postponed.