High street retailers pay 755% more in rates than online rivals, research reveals

Experts have said traditional retailers now pay 755% more in business rates than digital competitors as a war of words intensifies over a potential new online sales tax.

On Friday, the Government closed a consultation into the possible introduction of a tax on ecommerce as a potential measure to fund a reduction in business rates.

Bosses at Sainsbury’s urged the Government to launch the new tax as it accused the current business rates system of “destroying high streets up and down the country”.

However, retail rival Marks & Spencer said an additional tax on retailers would mean they will “cut their cloth accordingly”.

New analysis by real estate advisory firm Altus Group shows that for every £100 earned by large retailers in Great Britain, excluding non-store sales and fuel, £2.91 of that was due to local councils in business rates.

However, for large online-only retailers, for every £100 in sales, their total business rates amounted to just 34p, according to the data. Estimates suggest a revenue-based online sales tax of 1% on the online sale of goods to UK customers above an allowance of £2 million for smaller firms could raise around £1 billion a year.

Robert Hayton, UK President at Altus Group, said: “Ringfencing that revenue and targeting it to actually cut rates for retail, leisure and hospitality premises could lead to a reduction in rates of about 9%”.

Tax authorities around the world have been grappling for years to try to reach an international agreement with the likes of Amazon officially reporting their British retail sales in Luxembourg.

Hayton added: “No solution will be easy nor perfect but, if left unchecked, could lead to the substantial extinction of the high street and the erosion of local communities”.