Tesco calls for new tax on online retailers

Tesco has called for online retailers to face a new tax, saying the current system isn’t far.

At the moment, business pay tax based on what their premises are worth, so for example a shop in the city centre often pays more than an out-of-town warehouse.

The supermarket’s chief executive Dave Lewis says the current system doesn’t work, because online retailers can operate from much cheaper premises and pay less tax.

He wants business rates to be slashed by a fifth, funded by a two per cent ‘targeted levy’ on web retailers’ revenue, to ‘level the playing field’.

Writing in the Daily Mail, he said: ‘It doesn’t matter whether you are a large retailer such as Tesco, or run an independent corner shop – business rates have a huge impact on every bricks-and-mortar retailer. This is unsustainable.’

The current system is ‘outdated, not fit for purpose, and doesn’t reflect the way people shop today’, he said.

Referring to the succession of major high street fatalities in recent years, the business leader said it was ‘impossible’ not to notice the increasing strain on the retail sector but the Treasury had created a ‘downward spiral’ by leaving the rates system relatively unchanged.

His intervention follows similar calls for rates reform by the heads of John Lewis, Sainsbury’s, Marks and Spencer and Morrisons.

The proposed tax would be applied to revenue from sales of physical goods online, rather than on individual transactions, so it would be up to retailers whether to pass it on to consumers.

As a major online retailer, Tesco would also be subject to the levy, but would ‘commit to not pass a penny of it on to our customers’, Mr Lewis said.

‘As I see it, there are only two choices. We can prolong the status quo, losing jobs and business and impacting communities. Or we can put our tax system back in step with sales.

‘That would level the playing field, reduce the unsustainable burden of rates and increase investment – for the good of retail, and our great nation of shopkeepers.’