Wednesday 15 May 2019 8:37 am

DEBATE: Is the Tesco boss right to call for slashed business rates and an online tax to save the high street?

Robert Palmer is executive director of Tax Justice UK.
and Sam Dumitriu
Sam Dumitriu is research director at The Entrepreneurs Network.

Is the Tesco boss right to call for slashed business rates and an online tax to save the high street?

Robert Palmer, executive director of Tax Justice UK, says YES.

Tesco’s Dave Lewis is right: the way we tax high street shops and online firms isn’t working. The tax system benefits companies like Amazon and Google, which have perfectly legal ways of slashing their bills. This puts high street shops at a disadvantage.

Since it’s likely that an online sales tax would be passed onto shoppers, what we really need is a proper shake-up of how we tax multinationals to make them pay their fair share, including by making it much harder to stash corporate profits offshore.

Business rates are also a mess. Because the current system is based on rental values, if a landlord improves a property, the value goes up and so does the tax. The government should replace the current system with a tax based on the underlying value of the land the property sits on.

The tax system is just one part of the reason that high streets are under strain. But sensible reforms would make a big difference. Town centres should be cherished as the hearts of our communities.

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Sam Dumitriu, research director at The Entrepreneurs Network, says NO.

The high street is undergoing massive changes. Adapting to creative destruction is always painful, but the solution isn’t to tax new industries to subsidise the old ones.

Policymakers should instead focus on eliminating the barriers faced by businesses adapting to the changing retail environment. It should, for instance, be easier to get planning permission to turn failing shops into cafes or restaurants.

Online sellers shouldn’t be punished for responding to changing consumer demand by offering goods at a lower price in a more convenient manner. E-commerce platforms such as Amazon have lowered barriers to entry and enabled small and micro-businesses to cater to every obscure taste out there.

Worst of all, the reforms will do little to help struggling bricks and mortar retailers. The evidence suggests that commercial landlords respond to cuts by raising rents, leaving shopkeepers no better off. The only retailers that will benefit are those which own large property portfolios like, er, Tesco.


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