A second major supermarket has called for the imposition of an online tax despite calls from the industry's trade association to bosses for less conflict.
Morrisons chief executive Dalton Philips, who has just signed a 25-year deal with Ocado to establish an online grocery business, told the Daily Telegraph that the high street is at a 'massive disadvantage' to internet retailers and said 'we've all got to contribute'.
'We're moving into the online space so we'll have to pay our contribution. I'm not into intervention for intervention's sake but you've got to have a level playing field. As more and more sales migrate online it seems to me intuitive that you would tax the online channels as well. It's an issue we're going to have to face,' he told the newspaper.
He said there was no longer any logic in business rates going 'up and up' and town centre shops could not cope.
His comments over online tax have caused some confusion given his firm's hopes for its online business. But online is at present an insignificant part of its trade and a lower rate of business tax in the short term would give Morrisons a distinct advantage.
Sainsbury's chief executive Justin King complained in May there was not a level playing field on tax and referred to US plans to impose a sales tax as evidence that other countries were taking action. It's worth pointing out that, while it has a reasonable online delivery business, it still only has a small online general merchandise division compared to its arch-rival Tesco.
Others including former Tesco chief executive Terry Leahy and Sir Philip Green have called for an overhaul of the business rates system and a level playing field. They have argued the business rate tax on property is 'out-dated'.
The furore comes amid a Business, Innovation and Skills Select Committee inquiry into the retail sector which is increasingly expected to focus on beleaguered town centres, business rates and the emergence of the online sector.
But the British Retail Consortium has called together representatives from its members, including finance directors from major firms, to draw up a unified strategy to avoid the rising discord.
Following the first meeting it was reported in Retail Week (the digital edition for the July 12th edition is available here as of the date of this article) that members at the meeting had broadly rejected a call for an online tax. Helen Dickinson, the BRC director general said: 'There was consensus that the idea of seeing parts of the industry in conflict isn't in the interests of the industry and, most importantly, it isn't what customers want.'
She said: 'Business rates is the core issue for UK retail and there was broad consensus that the steep successive rises of the last few years are impacting on retailers' decision making like never before, especially against a backdrop of the industry's total tax contribution having risen significantly.'
This week she went further and echoed the views of online retailers that the waters are being muddied (some believe on purpose to suit the needs of large retailers that rely very little on online sales - which would include Morrisons and Sainsbury's) confusing the separate issues of online retail and tax avoidance by large online multinationals like Amazon and Google.
She said: 'We need to decouple the international tax element from business rates as, while interconnected, the require separate solutions.'
But Shop Direct chief executive Alex Baldock this week went a step further than Dickinson - although still in effect repeating the assertions he made last month. He told the Financial Times yesterday: 'I don't think an online only sales tax is a good idea. If you tax business it should do three things. It should promote growth, promote jobs and be fair. An online tax fails on all three counts.'
He continued: 'Whatever the reason, it's misguided. I feel for people who pay rates but it's a business choice.' He also pointed out that for many retailers it would not be a net gain since most now run 'multichannel' operations.
Meanwhile, a multinational accord to force firms like Google and Amazon to pay more tax are expected to be blocked by the US.
France has been lobbying for tougher cross-boarder agreement in the run up to the G20 summit this Friday but the US is understood to have pushed for more moderate change, in effect watering down the proposals.
The US is understood to be concerned that the rule changes target mainly US multinationals, and some of the countries fastest growing and most influential firms, according to the Observer newspaper.
The Organisation for Economic Co-Operation and Development (OECD) has been told to draw up an action plan for tax reform. But the US has struck out new proposals targeting digital firms and instead asked for a more moderate rewording of existing treaties.
No comments:
Post a Comment