THE government has been warned that launching a tax on online retailers would “hit at the heart” of the UK’s “world leading” industry.
The British Retail Consortium, the industry body, is examining the possibility of a tax on online retailers as a means of rebalancing the tax burden between traditional and online-only retailers.
Business rates, the tax retailers have to pay on commercial property, have escalated from £5.5bn in 2007 to over £7bn in 2012.
There is no equivalent for online retailers, and industry chief executives such as J Sainsbury boss Justin King have called for a “level playing field”.
However the founders of online retailer, sofa.com, have hit back at the idea, warning that a tax could be “a barrier to entrepreneurship” and negatively impact small businesses.
In a letter sent to Danny Alexander, the Chief Secretary to the Treasury on Friday, Rohan Blacker and Pat Reeve said the tax would also lead to less consumer choice.
The company was founded in 2005 and sells a range of armchairs, sofas and beds. It made £13m from sales last year and has sold over 45,000 sofas since it started.