Online retail tax plans unwelcomed by entrepreneurs

17th June 2013 | News

Plans to tax online sales are being examined by the British Retail Consortium (BRC) in a bid to rebalance the tax burden between online-only and high street retailers.
 
The Treasury has been warned by online retailers that the introduction of such a system would become an instant "barrier to entrepreneurship" in the UK.
 
Founders of online retail firm, sofa.com, wrote to the chief secretary of the Treasury, Danny Alexander, insisting that such a scheme to redress the imbalance would be "bad for consumers, business, and the UK".
 
Co-founders, Pat Reeves and Rohan Blacker, added: "A tax, if imposed, could be a barrier to entrepreneurship, negatively impact small business, reduce consumer choice and hit at the heart of the UK’s world-leading online retail industry.
 
"Sofa.com, like all profitable online retailers, already pays significant corporation tax and VAT.

"We employ lots of people who pay national insurance, and all our shareholders also pay tax."
 
The belief is that a new online retail tax would in fact reduce consumer choice on the web, going against the "market forces" – the consumers – who "decide which retailers are successful".
 
Mr Reeves and Mr Blacker insist that retail success online does not come easily and that online-only businesses fail just as readily as high street firms.
 
The letter added: "Online businesses often fail. Online isn’t some magical way of beating the high street, only the best businesses survive and as such, it’s absurd to imply that online retail has an ‘inherent advantage’ over traditional shops."
 
Online retail is one of the UK’s biggest "success stories" in recent years and to introduce an online sales tax would put future success at risk.
 
"The Government is calling on technology companies and entrepreneurs to help the UK economy," they said.
 
"The internet enables entrepreneurs to start businesses quickly and cheaply – it’s a great place for the 'little guy' with a good idea to bring a product to market.
 
"The vast majority of new jobs created in any year in the UK are from small firms. Therefore, an online sales tax will not be helpful."


Image: Keith Williamson