Pressure is mounting on Andy Burnham and Chancellor John Healey to tax online retail more heavily in the upcoming Autumn Budget.
As first reported by The Guardian, former Bank of England chief economist Andy Haldane is urging the Prime Minister and Chancellor to rebalance tax in favour of physical retail, in order to revive Britain’s flagging high streets.
In an interview for a Guardian series looking at how Britain can reverse the declining fortunes of towns, Haldane argued that the current tax system favours online sellers over physical retail, and needs realignment in order to “level the playing field”. He also wants Burnham and Healey to review business tax and introduce measures to supercharge devolution.
“The balance of tax incentives are strongly skewed towards the digital over the physical, and the large over small, and if you’re serious about high streets that needs somehow rebalancing,” he said.
A decade of decline
UK high streets have lost approximately 10% to over 20% of their total footfall and physical retail presence over the past decade, heavily accelerated by the shift to online shopping and the COVID-19 pandemic, according to research by the NHSA and Health Equity North. Meanwhile, online sales nearly tripled in the decade to 2024, growing by 199%, and currently account for around 30% of all retail sales.
The Prime Minister has expressed a commitment towards restoring Britain’s high streets and communities. In September, he announced a £210 million package that includes £125 million towards restoring dilapidated buildings and £65 million to rescuing businesses and buildings at risk of closure.
The Autumn Budget, which takes place on 28 October, is widely expected to include a tax crackdown on online marketplaces such as Amazon and eBay.
Societal changes
Any move to rebalance tax between online and physical retail would come against a backdrop of wider structural changes, including the rise of remote working and shifting consumer habits, which have also reshaped town centres and high streets over the past decade.
Nonetheless, with online retail now accounting for around a third of UK sales, any new levy on digital commerce would mark one of the most significant interventions in the sector for years, potentially reshaping the relationship between online retail growth and high street regeneration efforts.
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