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New online sales tax being considered as high street struggles

Ollie Gardner

8th February 2021

The accelerated shift from high street to online shopping has prompted the Treasury to consider introducing an online sales tax to slow the decline of brick-and-mortar stores.

The amount that UK consumers have spent shopping online has increased by 46% over the last year - as lockdowns and restrictions have forced many into buying from the comfort of their own homes. This has reduced high street footfall at a time when brick-and-mortar retailers were already struggling with the rising competition from online shopping destinations such as Amazon and Asos.

The Chancellor, Rishi Sunak, believes that an online sales tax may be one way to help support struggling high street retailers. Such a tax might allow physical shops to offer more competitive prices than their online counterparts and the tax's revenues could be reinvested in town centres - providing a 'double dividend'.

How this tax is received by large online retailers, who tend to have significant lobbying power, is yet to be seen. Tesco, and a number of other traditional retailers, have voiced their support for its introduction and the vast number of jobs that rely on the UK retail sector (2.9mn) will likely give this opinion significant weight.

Ollie Gardner

Ollie is a new economics teacher at an academically selective school having previously worked in the healthcare technology industry.

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