Amazon tax to rebalance online and physical retail?

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Chancellor Philip Hammond hints at introduction of an ‘Amazon tax’ to address the imbalance between online and bricks-and-mortar retail.


After an increasingly challenging environment for high-street retail in 2018, the downfall of House of Fraser could just be the straw that breaks the camel’s back. Chancellor Philip Hammond has hinted he could impose an ‘Amazon tax’ on online sales to rebalance the taxation between physical and pure play retailers. Bricks-and-mortar retailers face much higher tax charges than those operating purely online.


The Guardian reported that the business rates bill for House of Fraser’s 59 stores in 2017 was just over the £30m mark, with total sales of £787m. Amazon on the other hand had UK sales of nearly £9bn, but paid only £33m in business rates because it operates primarily from cheap warehouse property rather than prime high-street spots.


In an interview the Chancellor gave to Sky, Philip Hammond explained: "More and more of us are buying online. Indeed, Britain has the biggest percentage of online shopping of any major developed economy. That means the high street will change.


“We’re very clear that you have to support the high street through that process of change.”


He continued: “We want to ensure the high street remains resilient, and we also make sure that taxation is fair between business doing business the traditional way, and those doing business online.


“We may have to look at temporary tax measures to rebalance the playing field until we can get international agreements sorted out.”


The tax could make the retail playing field fairer when it comes to the major players, but raises questions about small online businesses and those companies who trade both on and offline, a business model increasingly adopted by independent and small stationery retailers.


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