The Treasury is considering a new sales tax that could increase online shopping and home delivery prices to help boost the government’s coffers and the struggling high street.
Chancellor Rishi Sunak said a so-called “online sales tax” could be one way to make up for the billions lost during the pandemic.
It would run alongside the existing business rates tax system, where retailers pay taxes based on the so-called “rateable value” – essentially the rental value – of their property.
The problem with the current system is that it favours online retailers that don’t have to pay pricey rents.
But in a call for evidence published this week, the Treasury said an increase in online shopping due to covid-19 could mean taxing online sales provides a “sustainable and meaningful revenue source”.
The new online tax could also help drive shoppers back to the high street, giving retailers a boost alongside other schemes such as the VAT cut and Eat out to Help Out scheme which launches next week.
According to The Times, the tax would be around the 2% mark and that it could raise £2billion a year for the Treasury.
It added that the government is also considering a mandatory charge on online deliveries that could mean higher prices and increased costs for online shoppers.
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The Treasury Select Committee recommended the introduction of an online sales tax in a report back in October last year.
At the time, it said a shake-up of the “broken” system was needed to prevent the decline of the high street.
Consumers and businesses now have until October 31 to respond to the Treasury, which is expected to set-out its initial findings this autumn before revealing its final decision in spring 2021.
You can respond to the call for evidence by completing an online survey, here.