Amazon is one of the highest profile tax avoiders in the UK, which has led to calls for an online sales tax to be introduced.

The corporate tax structure of Amazon has meant that in the 2017-2018 tax year it only paid £4.6m in taxes on a sales of £2bn.

As the high street continues to diminish, hopes of a 20% online sales tax have been dampened by the revelation that the introduction of such regulation could be illegal under EU law.

While the UK will leave the EU at the end of March, under a draft withdrawal agreement ‘dynamic alignment’ with EU state-aid rules has been accepted, placing a sales tax under pressure.

Retailers must now focus on real ways that the high street can be saved instead of supporting the taxation of rivals.

Potential harm of online sales tax

The introduction of an online sales tax, while making the system fairer with regards to giants like Amazon, would have penalised smaller online retailers.

While there is no denying that the taxes being paid by the likes of Amazon need examination, the same is the case for other large companies that do not operate in retail. For example, BP’s tax credits have meant that the company is a net receiver of tax in the UK, while other net receivers include Royal Mail and Centrica.

The introduction of an online sales tax would do more harm than good as it would significantly impede small businesses. What’s more, consumers would feel the impact of price rises. The corporate tax issue is something that the government would need to tackle across all industries with regards to the large earners in the UK.

UK high street under pressure

The British high street has seen a number of casualties in recent times, including BHS, Toy R Us and Poundworld. Meanwhile, online retail in the UK grew with a compound annual growth rate of 9.9% between 2013 and 2017 according to MarketLine data.

However, the introduction of an online sales tax would have done little to save the high street. The evolution of technology has enabled e-commerce to become increasingly easy and efficient, meaning that consumers are not necessarily going to return to the high street should online prices rise.

The success of bricks and mortar retailers must come from the retailers themselves. These high street stores need to look at ways to compete better, be it through focusing on online and offering a convenient click and collect option. Reviewing products on offer or by differentiating  from the competition by focusing on the customer experience would prove beneficial.

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