LONDON — London is hoping to piggyback off the U.S. Supreme Court ruling last month that enforces sales tax on U.S. e-commerce companies.
The New West End Company, a powerful lobby for more than 600 retailers, hoteliers and property owners including Selfridges, Marks & Spencer and Fenwick, submitted a proposal on June 22 urging the government to introduce a business rate reform.
The reform calls for a one percent tax to be placed on online business revenues. According to New West End Company, this will raise more than 5 billion pounds a year.
“Business rates are currently the biggest tax that high-street retailers pay, accounting for nearly half of their tax bills. The current structure of business rates provides online retailers with an unfair advantage and a 90 percent rate discount in an already struggling bricks-and-mortar retail environment,” said Sir Peter Rogers, chairman of New West End Company.
In London, e-commerce companies pay one-tenth of brick-and-mortar business rates, but with the proposed tax reform, high-street business rates can be cut by 17.5 percent, which could mitigate retail and restaurant closures across the U.K.
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The proposed tax rate would only apply to companies that do the bulk of their business online so that high-street retailers with an e-commerce channel would not be taxed twice.
“London’s West End is a major contributor to the U.K. economy with retailers generating more than 9 billion pounds in sales a year and employing over 80,000 people. If we do not act now we damage the ability of those businesses to survive and continue to drive our economy,” he said.