An online sales tax: good for the high street, but bad for consumers?

With more news regarding high street retailers struggling in the current pandemic, the concept of an “Amazon Tax” seems to be welcomed by bricks and mortar retailers.

Now a nationwide online sales tax has been proposed by chancellor Rishi Sunak, in a bid to alleviate the pressure on struggling high street retailers and provide a £2 billion “sustainable and meaningful revenue source for the government”. The proposed online tax would see higher charges being placed on deliveries and a two per cent levy on all web sales.

On the one hand, struggling retailers lacking robust online shopping facilities will surely welcome such a change which would (at least in theory) encourage customers to shop on the high street. However, retail groups including the British Retail Consortium (BRC) have warned against these proposals, stating that they would unfairly impact upon shoppers who have turned to online shopping to avoid exposure to COVID-19.

The measures must be considered carefully, as it can be argued that such measures would be unfair on the huge number of elderly who have turned to online shopping for the first time during the pandemic especially when many retailers have gone through extensive efforts to ramp up their online shopping capabilities.

According to the UK Consumer Survey undertaken by Magneto Commerce 61% of UK shoppers said free delivery was a key factor that would make them return to an online retailer. Therefore it is vital that consumer behaviour is taken into consideration when considering an online tax, especially during a pandemic.