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Anorak | Sainsbury’s Boss Spouts Bollocks: boss wants internet firm to pay supermarket-sized business rates

Sainsbury’s Boss Spouts Bollocks: boss wants internet firm to pay supermarket-sized business rates

by | 13th, June 2013

THIS really is a bit much coming from the boss of Sainsbury’s. It’s total and complete bollocks: my assumption is that it’s a direct attempt to mislead. He’s claiming that a US law which makes internet sellers pay sales tax (our equivalent is  VAT) means that we should have a law that makes internet sellers pay business rates as if they had huge shops all over the place.

In the UK, Mr King is one of a number of high-profile retailers who have warned that businesses rates, a tax on commercial property, are crippling the high street because there is no equivalent for online retailers.

“The burden of taxation falls very heavily on bricks and mortar retailers,” Mr King said. “I think we need to rebalance the tax burden.”

Business rates are costing the retail industry more than £7bn a year and increased by an inflation-linked £175m in April. The British Retail Consortium, the trade body, has held talks with the Treasury about their concerns after a string of high street retailers collapsed into administration earlier in the year.

Mr King said the Marketplace Fairness Act was designed “specifically to address this issue”. Shop owners in the US have backed the tax, although it has proved controversial because of concerns about how the tax can be collected when online transactions occur across state and national boundaries.

No it wasn’t you numpty. It’s got absolutely sod all to do with property taxes (the US equivalent of business rates).

Until very recently an online retailer in the US did not add sales tax to its bills (only if it had an actual office in the state it was sending the stuff to did it add it). The MFA changes this, so internet retailers will now collect the sales tax of the place that the goods are sent to. This is just like the VAT system in Europe. You’re in the UK, you pay UK VAT on what you buy over the internet (except electronic books and software for some reason). You’re in Germany, you pay German VAT.

Business rates are an entirely different matter. You pay these based on the value of the property that you run the business from. And not unaturally, shops on the high street are worth more than a shed on some trading estate in the wilds of the Midlands. Thus the online retailers do indeed have an advantage: but it’s an entirely natural and just one. They pay less in property taxes because they use less property.

What King is saying here is that it’s unfair that I pay more petrol tax filling up a Chelsea tractor than if I fill up a Ford Fiesta. Well, yes, that’s the point of it, isn’t it? I’m using more so I should be paying more tax.

God knows where he got the idea that we’d be taken in by this from.



Posted: 13th, June 2013 | In: Money Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink