eCommerce

UK Government Report Calls On eCommerce Players To Pay More Taxes

The U.K.’s Housing, Communities and Local Government Committee is calling on internet retailers to pay higher taxes to help struggling offline retailers in the country’s shopping districts.

According to a report in Bloomberg, the U.K. government agency called out Amazon, Asos and Boohoo Group, arguing they should pay more taxes since traditional retailers are losing business to them. The group called for an online sales tax, increased value-added tax and green taxes due to the shipping and packaging associated with eCommerce. The taxes would help physical stores as more purchasing moves online.

“Business rates must be made fair,” said Clive Betts, a member of the House of Commons and chairman of the committee, in the report, according to Bloomberg. “They are currently stacking the odds against businesses with a high-street presence and this must end.” Sports Direct International’s billionaire owner Mike Ashley told the committee late last year that the biggest threat to U.K. retailers is eCommerce. He proposed the idea of placing a 20 percent tax on those retailers that earn more than a fifth of their sales via the internet, reported Bloomberg.

According to the report, the U.K. retail sector lost about 70,000 jobs last year, with big retail chains including Marks & Spencer and Debenhams announcing plans to shutter hundreds of stores. Tesco, the largest retailer in the U.K., announced in the early part of this year it was cutting as many as 9,000 jobs. The retailer blamed a shift to online shopping for the malaise.  The report argued that traditional retailers pay enough tax but that online retailers aren’t paying their fair share. The report pointed to Amazon for one example. It pays around 0.7 percent of its revenue in the U.K. in taxes. Most physical retailers pay double to eight times that rate, noted Bloomberg. “Corporation tax is based on profits, not revenues, and our profits have remained low given retail is a highly competitive, low-margin business and our continued heavy investment,” Amazon said in a statement to Bloomberg.

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