Online sales tax ‘would kill entrepreneurial spirit’, retailers warn

July 23, 2013

The introduction of an online sales tax would kill entrepreneurial spirit and hinder economic growth and jobs, retailers have warned.

Chief executives of six online retailers, including Ocado and Shop Direct, have signed a letter to the Chancellor in which argue against calls for a US-style tax for online purchases.

‘An online tax would kill entrepreneurial spirit by making it harder for smaller online retailers to get started,’ the letter states.

‘Online is a rare and precious success story for the UK and one that we should take pride in. At a time when SMEs in these sectors are attempting to deliver innovation, growth and jobs they should not be choked off by unintended consequences of an unfair tax.’

It continued: ‘There is no logic to penalising companies that provide consumers the convenience, efficiency and value online shopping offers.’

However, supporters of the tax say it would help to provide a ‘level playing field’ for bricks-and-mortar retailers struggling with soaring business rates and rent costs.

The bosses of supermarket chains Sainsbury’s and Morrison’s recently criticised the government for creating an ‘unfair burden’ on high street retailers by failing to adequately tax their online-only competitors.

The US recently passed the Marketplace Fairness Act, which will allow states to levy a tax on the sale of online products or services.

A version of this law was one option recently proposed by the British Retail Consortium, following talks over the burden of business rates on the retail industry.



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