Digital Sales Tax Has To Be Looked At To Save The High Street

It's a horrid time to be in retail right now, and I take no solace in being the bearer of bad news that I, among many, have predicted for months. The familiar names we all grew up with on the high street brands and the well-known brands they sell are caught in a perfect storm.

This week and last, the name in the frame is House of Fraser, but it looks like it may soon by Debenhams too. Every other week there seems to be a new name that is either shutting up, going into receivership or closing down stores. You know it's a general trend, rather than a few cases of bad management, when Marks and Spencer starts a cull of one hundred stores. 

The brands that supply them with goods are also suffering as the pound keeps riding at just above parity with the Euro, making imported food and fashion, among other goods, far more expensive than before Britain went down the road of Brexit two years ago.

The elephant in the room is that while business rates have shot up for retailers and shoppers, e-commerce platforms have a far easier time of it. The operators that pile 'em high in a warehouse and shift them out through staff on minimum wage are having an altogether easier time of it.

it wouldn't be so bad if they always paid UK tax in full. Now, I'm not going to get into naming names here because it always leads to a flurry of complaints from one operator in particular. However, any online retailer that is taking money from the UK and paying tax on it in another jurisdiction is quite frankly damaging the high street with a model that major retailers simply cannot follow. Similarly, any online retailer that claims to pay UK tax but then mixes up the reporting of these arrangements with other countries via a tax haven needs to have a long and hard look at themselves and how they might improve transparency. 

The truth is that the high street is taxed in a model fit for before the internet, but not after. We need to be supporting the high street more, not raising more taxes on physical shops and making parking all but impossible.

That's why it's interesting to see Philip Hammond talk again about consulting with other tax regimes to challenge the way the tech giants run their accounts, and if these come to nothing, consider adding a sales tax on digital transactions that happen in the UK but are accounted for in some remote tax haven. 

Hammond's comments, reported on at Sky News, are almost certainly little more than feeding the media a response to what the Government is doing in the face of such difficulty. However, they surely have to see that the time for talking about sucking business out of the UK and accounting for its overseas has to come to an end and the much-talked-about digital sales tax could be the solution?

He talks about how shopping and the high street has changed but if we are to avoid row after row of restaurants (and can you name a chain not shutting down, or considering a cull, of its outlets) then he will have to move on to how the Government has changed. It needs to level the playing field between offline and online. Brick and mortar still accounts for the vast majority of purchases, but its proportion is dropping in favour of operators in warehouses and distribution centres that have an unfair tax advantage over the high street. 

Until this is tackled, we'll see more blood on the high street and likely see another huge name -- potentially Debenhams -- go under, or be snapped up for a bargain fire-sale price.

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