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Britain's Chancellor of the Exchequer Philip Hammond:
Britain's Chancellor of the Exchequer Philip Hammond: "We’re very clear that you have to support the high street through that process of change." Image: REUTERS/Henry Nicholls

Online Retailers May Face “Amazon Tax” to Save Brick-and-Mortar Businesses

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Britain's Chancellor of the Exchequer Philip Hammond: "We’re very clear that you have to support the high street through that process of change." Image: REUTERS/Henry Nicholls

Chancellor Philip Hammond has said he is seriously considering an “Amazon tax”. This would be a part of an intervention meant to help to resuscitate struggling businesses.

Rescuing Brick-and-Mortar Retail

Chancellor Philip Hammond revealed he is strongly considering the introduction of a new type of “Amazon tax.” Its purpose would be to level the playing field and rescue struggling brick-and-mortar businesses in the United Kingdom.

This special type of retail tax for online businesses would be the chancellor’s strongest intervention so far. This new type of online business tax would be applied, if necessary, even without complete international support and compliance.

Changing High Street

Hammond cautioned high street retailers that they would need to change in a positive way, permanently.

“We’re changing our shopping habits,” said Hammond. “More and more of us are buying online. Indeed, Britain has the biggest percentage of online shopping of any major developed economy. That means the high street will change. We’re very clear that you have to support the high street through that process of change. The nature of the offer on the high street is going to change over time. There’s going to be less retail, more leisure, bars, community facilities.”

The chancellor has, so far, stayed out of intentions to reform business rate. He is now looking into strategies – including new forms of taxes – for dealing with online businesses. The reason this tack is being considered is that online businesses tend to pay considerably less in taxes than their high street counterparts.

Leveling the Playing Field?

Hammond explained that the hope is to make taxation fair regardless of whether businesses operate online or in traditional brick-and-mortar shops. Therefore, according to the chancellor, this means that international tax treaties must also be renegotiated. After all, many of the large online businesses are international corporations headquartered in other countries.

“If we can’t get international agreement to do this we may have to look at temporary tax measures to rebalance the playing field until we can get international agreements,” said Hammond. When asked about the specific measures he had in mind, he explained that the European Union has already been discussing a tax on online retailers which would be based on value generated.

Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.