Rishi Sunak will be revealing his second budget on March 3 and many are expecting the Chancellor will be forced to address the huge debt levels built up by the Government. As a result of SEISS, the furlough scheme and other coronavirus themed support measures, the ONS predicted public spending would reach nearly £400billion by March.
Cas explained: “As we approach the budget, an online sales tax would be a huge mistake from Chancellor, Rishi Sunak. While it’s been nicknamed the ‘Amazon tax’, the reality is that it won’t impact the big players in the market but will stifle the growth of so many independent British retailers which have relied on online sales as a lifeline over the past twelve months.
“In the past few years, headway has been made in growing Britain’s own eCommerce industry. We’re gaining traction in developing a retail ecosystem that works for retailers and customers, that protects and supports small businesses and encourages people into bricks and mortar stores. An online sales tax will only damage this developing UK industry before it really gets off the ground and that concerns me for the sector.
“As an online marketplace, we’ll of course feel the impact of this type of tax, but I am far more concerned about the millions of entrepreneurs and SMEs across the country.
“Over 6,000 independent British retailers sell on OnBuy and it is those business owners that will take the hit. It won’t touch the sides when it comes to the big corporates.
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“I think the Chancellor could be playing a dangerous game. A tax like this only increases the barriers to entrepreneurship, something the country could certainly do without in the wake of Brexit and given the state of the economy coming out of the pandemic.
“Restricted growth in the short term will do nothing to benefit our country or enable the growth of the British eCommerce industry that is starting to take hold.
“We need to protect small businesses at all costs and an online sales tax is not the way to do it.”
An arguably more realistic tax change could come courtesy of Capital Gains Tax (CGT) as the Chancellor commissioned a review on this and is considering proposals by the Office of Tax Simplification (OTS), who laid out how CGT could be reformed.
The proposals included aligning CGT with Income tax but Cas also warned engaging with this could prove to be detrimental: “Entrepreneurship and investment are the drivers of growth. A move by Chancellor Rishi Sunak in this year’s budget to raise Capital Gains Tax (CGT) to similar levels as income tax rates would have significant implications for British investors and entrepreneurs looking to build businesses.
“Investors look to create gain which is taxed up to 20 percent compared to income which is taxed up to 45 percent. By aligning the rates, investors who ultimately support business growth may think twice about what the incentives are for backing a small business venture.
“Entrepreneurship is a risky activity. With the suggestion that taxes will be raised on profit, entrepreneurs as well as investors will struggle to justify the reduced returns, given the element of risk.
“A ramp up in CGT is in danger of stifling the UK’s entrepreneurial spirit, at a time when the economy is in drastic need of stimulation.
“I would urge the Chancellor to consider keeping rates lower to encourage investment in business which will be key to the post-pandemic economic recovery.”
Entrepreneurial spirit does appear to be suffering in the UK at the moment, with the latest ONS data showing the number of self-employed in the UK fell to 4,374,000 in February, a drop of 653,000 from the same time last year.
Additionally, the same statistics showed nearly 200,000 young people have been unemployed for more than six months, the highest figure for over four years.
While the data did highlight that over half a million jobs have been created since the start of the pandemic, many fear these results could be reversed as the Government halts its support measures.
While many experts within the field have warned the Chancellor of making hasty tax changes, evidence has emerged that conservative voters themselves are the most supportive group of an “Amazon tax”.
Recently, the Royal Society for Arts, Manufactures and Commerce, conducted a survey of 2,004 UK adults who were representative of the wider population.
This survey found:
- 50 percent of the UK public would support the UK government introducing an ‘online sales tax’ of one percent. Conservative voters are most strongly in favour, with 61 percent in support, while 50 percent of Labour supporters would back the move. 22 percent of adults overall would oppose the tax.
- The level of support skews by age, with 43 percent of 18-24 year-olds in favour, compared to 62 percent of over-65s.
- 74 percent think companies like Amazon will find ways to avoid paying it; just 38 percent think it would help save high street jobs; and only 35 percent say they would be more likely to shop physically rather than buying online.
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