High Street

M&S warns chancellor of potential ‘damage’ of online sales tax

The government said the idea behind the tax would see it utilised to help fund a reduction in business rates tax

Marks and Spencer has penned a letter to the chancellor warning of the potential damage an online sales tax would have on the high street.

It comes as the government’s consultation on whether to implement such a tax closes on Friday (20 May). The government said the idea behind the tax would see it utilised to help fund a reduction in business rates tax.

However, according to M&S CFO Eoin Tonge, the tax would “damage high streets further” as multi-channel retailers would likely cut their “least profitable” high street sites in order to help offset the cost of the new tax.

In the letter, as seen by the BBC, Tonge said: “Introducing an additional tax on retail – already overburdened – will simply mean retailers cut their cloth accordingly.

“…This rationalisation will always start with the least profitable parts of a business – which, in the case of multi-channel retailers, will more often than not be High Street stores,” said Mr Tonge.”

He added: “Therefore it is likely that, far from helping the High Street, an online sales tax will damage shops and our high streets further, particularly in areas that require new investment to bring them back to life.”

Tonge’s view comes in the face of a recent study conducted by Colliers which found an “overwhelming support” to the introduction of a form of online sales tax to take the pressure off business rates from retailers.

It revealed 89% of respondents were in favour of the new tax with only 11% in disagreement.

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