Online sales tax would harm high street, says M&S

A proposed sales tax on online transactions would be counter-productive, according to Marks & Spencer.

Responding to a UK government consultation, the retailer said that a new online tax would “punish” the very retailers it is intended to support and leave them less money to invest in high street stores, BBC News reports.

The aim of the proposal is to rebalance the taxation of the retail sector between online and in-store retail. According to the Treasury, the proceeds would go towards funding a reduction in business rates for shops.

However, there are a number of issues that would need to be resolved, such as the different forms an online sales tax could take and how to define an online sale reflecting the range of transaction, delivery and collection options.

Due to close on Friday, the consultation explores these issues and the potential impacts of an online sales tax to help the government assess the case for and against implementing such a tax.

M&S chief financial officer Eoin Tonge said in excerpts seen by the BBC that traditional retailers have worked hard to diversify and grow their online sales.

He argued that an additional tax burden would make it harder for retailers to make the necessary investments to survive and grow in the modern, digital era.

“Introducing an additional tax on retail — already overburdened — will simply mean retailers cut their cloth accordingly,” he said.

“This rationalisation will always start with the least profitable parts of a business — which, in the case of multi-channel retailers, will more often than not be High Street stores.

“Therefore it is likely that, far from helping the High Street an online sales tax will damage shops and our high streets further, particularly in areas that require new investment to bring them back to life.”