Online shopping bills could rise in sales and delivery tax hike

A new sales tax that could increase online shopping and home delivery prices to help replenish the government’s coffers and the struggling high street, is being considered.

Chancellor Rishi Sunak said a so-called “online sales tax” could help make up for the billions lost during the coronavirus pandemic.

It would run alongside the existing business rates tax system, where retailers pay taxes based on the so-called “rateable value” – essentially the rental value – of their property, MirrorOnline reports.

Currently, online retailers are perceived to have an advantage because that don’t have to pay costs of prime town centre sites.

But in a call for evidence published this week, the Treasury said an increase in online shopping could and subsequent tax could provide a “sustainable and meaningful revenue source”.

The new online tax could also drive shoppers back to the high street, giving retailers a boost alongside other schemes such as the VAT cut and Eat Out to Help Out scheme, which launches next week.

According to The Times, the tax would be set at around two per cent and it could raise £2billion a year for the Treasury.

The report also added that the government is additionally considering a mandatory charge on online deliveries which would result in higher prices and increased costs for online shoppers.

The Treasury Select Committee recommended the introduction of an online sales tax in a report back in October last year.

At the time, it said a shake-up of the “broken” system was needed to prevent the decline of the high street.

Consumers and businesses now have until October 31 to respond to the Treasury, which is expected to set-out its initial findings this autumn before revealing its final decision in spring 2021.

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