Home Tax Planning 'Amazon tax' plan to rescue UK's decaying high streets

'Amazon tax' plan to rescue UK's decaying high streets

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Scottish high street stores are pleading for tax relief after the Chancellor suggested he was planning an “Amazon tax” raid on online retailers.

Landmark department store House of Fraser was rescued from administration yesterday by tracksuit tycoon Mike Ashley, prompting calls for Government intervention to prevent high street stores going to the wall.

Chancellor Philip Hammond has hinted at tax changes to put high street stores on a level playing field with discount online retailers.

Ministers at Holyrood have pledged to support any staff facing redundancy, but the Scottish Retail Consortium (SRC) urged the SNP to go further with its own tax changes.

The Scottish Government said it was open to reviewing the large business supplement, which sees large properties like department stores pay more than companies that operate out of smaller premises.

READ MORE: House of Fraser sold to Sports Direct owner and ex-Rangers shareholder Mike Ashley for £90m

Some 17,000 staff have been informed they will be transferred over from House of Fraser to Mr Ashley’s Sports Direct business, but doubt remains over the long-term future of jobs and whether Mr Ashley will shut underperforming stores as part of a restructuring programme.

Ewan MacDonald-Russell, head of policy at the SRC, said: “In recent years, the Scottish Government has looked to the retail industry as a source of revenue and they really should not be doing that.

“Big high street department stores are hit by a big business rates bill, large people, costs and of course in Scotland we uniquely have the large business supplement.

“We want the Scottish Government to at least emulate what is happening elsewhere in the UK, as they did when they matched the move to CPI on business rates.

“Scotland is probably more exposed to these changes as we have a lot of stores under extra burdens, so the Scottish Government should match or even do more to help the industry.”

The Chancellor has said he may consider taxing online retailers based on the “value generated” in Britain.

The SRC urged politicians to resist measures to help the high street by taxing online retailers more. It warned that the vast majority of high street stores now have an online presence and could be hit with double tax.

READ MORE: House of Fraser falls into administration putting thousands of jobs at risk

The Scottish Government has its own business taxes but they are largely based on property assets — such as non-domestic rates — which account for a tiny fraction of online retailers’ value.

The SNP doubled the large business supplement in 2016, raising it from 1.3p in the pound to 2.6p. This is added to the poundage rate for non-domestic rates for larger businesses. The Scottish Government expects to raise £127.8million in revenues from the large business supplement – which is paid by one in eight commercial premises in Scotland – in the next financial year.

Murdo Fraser, the Scottish Conservative finance spokesman, urged the SNP to do more to support retailers. at a time of “crisis on our high streets.”

“I do welcome this deal but sincerely hope Mr Ashley can retain as many House of Fraser jobs as possible,” he said. “However, given the reputation and history of Sports Direct it is also important that employees are given some reassurances regarding their conditions and their security.”

Mr Ashley has pledged to make House of Fraser “the Harrods of the high street” — but he has previously faced criticism from a Westminster committee for running his Sports Direct business like “a Victorian workhouse”.

Jamie Hepburn, the Scottish Business Minister, said: “I hope the buyout of House of Fraser by Sports Direct means there will soon be an end to what has been a prolonged period of uncertainty.

“This is a very difficult time for all House of Fraser employees and in particular for Edinburgh Fraser’s store, which has previously been listed for closure.

“The Scottish Government are monitoring the situation closely and should potential job losses be announced, we will provide support for any affected employees through our PACE initiative.”“Through providing skills development and employability support PACE aims to minimise the time individuals affected by redundancy are out of work.”

READ MORE: House of pain – administrations and store closures blight the high street

The loss of House of Fraser would have been a hammer blow to Scotland, where the business was founded in 1849.

Other major retailers like Maplin, Toys R Us and Poundworld have all gone bust this year, with firms such as Mothercare, Carpetright and New Look undertaking store closure programmes.

A Scottish Government spokesman said it was doing all it could to support the Scottish economy.

“The large business supplement helps ensure a fairer system where smaller businesses pay less tax while larger businesses pay slightly more,” he said. “We will review the level of the supplement at each future budget.”

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