Online Sales Tax: Is the British Retail Consortium Insane?

The British Retail Consortium is reportedly looking to put online retailers on a level playing field with bricks and mortar shops, who pay £7bn in business tax rates per year, by slapping on an e-commerce tax.

Is the BRC insane?

This is a ridiculous idea and on the same level of insanity as suggesting something like a rural sales tax, just because businesses in the countryside pay less rent for bricks and mortar stores, than in the city. Why not charge them too?

If village shops were made to pay more tax this would drive people into the high streets and level the playing field for the beleaguered high street stores.

Look at it from the point of view of the high street retailers, poor devils; they have to pay out for their bricks and mortar.

Online Companies Already Pay Lots of Tax

It is well known, online businesses do not have any physical premises - but do they really? If It all exists in the internet cloud then the offices, the warehouses and the staff must all virtual.

Online retailers are already paying corporation tax and VAT. They also pay for postage charges, fuel surcharges and packaging.

Yes, some people do charge for them but how many do not? What about sellers' fees on marketplaces? Online payment systems, such as PayPal, already takes a cut of each transaction.

Then there is website hosting, SEO, online marketing, sales teams, customer support, returns handling and not to mention the huge amount of online competition.

And that is what it comes down to in the end - competition.

The reports suggest that this is an attempt to suffocate the competition and preserve a means of commerce, which has already had its day; the physical shop on the high street.

Failure to Innovate

History is littered with examples of societies, people and systems of commerce that have died because of a failure to innovate.

Such as ancient Egypt or Rome - they failed because they refused to change and they were corrupt.

I think this fits neatly with what is happening here. History repeats itself.

This the last gasp of a crumbling kingdom who prefer not to innovate. It is much better for them to simply try and bully their way into getting what they want.

Like the introduction of VAT for take-away food this would undoubtedly be a fudge-up. (Please excuse my confectionary stand in for the intended word).

How are they going to tax John Lewis, Next and Argos? Which category will they fall into?

It all smacks of the current trend of desperate proposals that have not been considered properly. If recent events are anything to go by, the current incumbent government will jump at the opportunity, to try and squeeze some more money out of British businesses.

Selling Online Doesn't Give Inherent Advantage

Selling online does not give an inherent advantage over traditional stores.

High street stores have massive brand awareness, buying power, preference from suppliers and trust from consumers.

Small independent retailers won't benefit from the proposed tax. Consumers will still go to the major high street chains to buy because they will sell products at a lower price than any independent store.

When was the last time you saw an independent store in a high street anyway?

Next is an excellent example of a store that has taken advantage of their huge chain of stores to innovate and provided a superb home delivery service.

You can order at 9pm and get your clothes the next day! Many online-only businesses fail and an attempt to impose an extra tax on them will no doubt be bad for the struggling economy and for British entrepreneurs, who I believe are considered the great hope for economic recovery.

James Strachan is the technical director at James and James and James Hyde is the operations director.

James and James, formerly named Six Works Ltd, is an eCommerce and order fulfilment warehouse for the despatch of online orders.