We love a good headline, so we were instantly attracted to this one which sums up our feelings about the online sales tax proposed by the British Retail Consortium.
To bring everyone up to speed, Ian Cheshire, chairman of the BRC and chief executive of B&Q owner Kingfisher, Sainsbury's chief executive Justin King and former Tesco chief Sir Terry Leahy have all surfaced recently to argue the case for an online sales tax.
We believe that, in reality, most of online retailers actually pay quite a lot of tax already, face expenses that bricks and mortar retailers don't, and are normally in rapid growth phases that mature retail businesses are not. We also believe that the opportunity for job creation in low margin, fast growth businesses is something the government should take seriously.
Jobs need to come from somewhere especially when promises from supermarkets that they would soak up the public sector fall-out never materialised.
So, we've been burrowing down into the general concept to show the lie to their arguments. In fact, they have all been very vague about how it would work. But we believe the principle - that online retailers should pay more tax to bring them onto a level playing field with bricks and mortar retailers - conceals the real thrust of the argument - that they want a reduction in business rates.
We also think they are intentionally using public ire against tax avoiding multinationals such as Amazon, Google and Ebay to help their argument - and thus creating confusion between offshore tax avoidance and an online sales tax.
In an article in the New York-based International Business Times, 'Online Sales Tax: Is The British Retail Consortium Insane,' two directors from British ecommerce fulfilment business
James and James pull no punches.
The article gets off to a flying start by pointing out the idea is '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.'
Of course, retailers pay business taxes on physical shops but what about postage charges that all need to be absorbed these days? Fuel surcharges, packaging? Dealing with returns - which are astronomically higher online than in shops? Dealing with the increasing need for customer service? The increasingly huge costs of customer acquisition? Not to mention that all online retailers are obliged to pay corporation tax - where they are based, like most are, in Britain rather than Luxembourg - and that king of sales taxes, VAT.
Lest we forget, the government increased VAT from 17.5 per cent to 20 per cent in January 2011. Wouldn't reducing that be a better call for the BRC than, let's be honest, bullying smaller businesses.
Oddly too the only growing parts of many of their business are the online parts. Shop-by-shop almost all of them are showing declines if the online or 'click and collect' portion is deducted and have been fore years.
Generally speaking too, online warehouses are more costly and busier than off-line ones dealing in bulk - sending out small packages and employing more staff.
The article continues: '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.'
And so we get down to the point. History, as they say, repeats itslef. As with every innovation that eventually becomes regarded as part of everyday life, those who have made the most money from the old way are the fiercest opponents.
Refusing to accept the tidal wave of oncoming change will put any 'traditional' retailer in the same position. Cast adrift in the cyber seas after failing to blow up their virtual life raft.
'This the last gasp of a crumbling kingdom which preferred not to innovate. It is much better for them to simply try and bully their way into getting what they want,' the pair continue.
'This would undoubtedly be a fudge-up. 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.'
And what it all boils down to is who has the loudest voice and who gains from levying more tax. Because Tesco, Sainsbury's and B&Q do not need a tax break. They do not need to level the playing field. The ones that do - the small town centre shop owner - have already been crushed by the likes of the Tesco, Sainsbury's, B&Q and the move to vast out of town stores and shopping centres and the BRC never once voiced its concern for those poor devils.
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