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Government rules out online sales tax

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The Government appears to have ruled out the introduction of an online sales tax in its reply to six retailers who wrote to the Treasury last month to warn of the damage such a tax might create.


Last month’s letter from John Roberts chief executive of Appliances Online, Julian Granville, chief executive of Boden, Angela Spindler, chief executive of N Brown, Holly Tucker, chief executive of notonthehighstreet.com, Tim Steiner, chief executive of Ocado and Alex Baldock, chief executive of Shop Direct Group, argued that such a tax “would kill entrepreneurial spirit by making it harder for smaller online retailers to get started.”

Now The Sunday Telegraph, which carried the original letter in full, reports that a reply has been received from David Gauke, Exchequer Secretary to the Treasury. In that reply, Gauke said that the Government was focused on finding a global solution for the reform of tax rules for multinationals through its work with the G20 and the Organisation for Economic Co-operation and Development (OECD) rather than looking to target online businesses specifically.

The Sunday Telegraph quoted Gauke as saying: “The Government recognises that online businesses contribute to growth in the UK and supports continuing success in the sector. Many online businesses operate across international borders and it is therefore important to have international agreement on the priciples of how multinational businesses, including online, are taxed.

“However, we favour an approach which aims to ensure common principles apply to all businesses, whether operating online, from physical premises or with a combination.

“For this reason, we do not favour a specific tax targeted at the online business sector, although we aim to ensure that tax principles are developed which can be applied consistently across the economy.”

The news has been welcomed by retailers behind the letter. Ocado told The Guardian: “We are delighted that the Treasury is against placing an extra burden on innovative industry operators in the most dynamic part of the economy.

And Helen Dickinson, director-general of the British Retail Consortium, said an online sales tax was not the place to start. “It’s important that common principles should apply to all businesses but the principles that apply at the moment are from a bygone age. Business rates in particular have ceased to be fit for purpose. It’s time to acknowledge that there is a broad consensus around the need for reform.”

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