Budget 2021: Is the gap between online and high street retailers closing fast enough?

Budget 2021:Chancellor Rishi Sunak Inflation likely to rise further

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Chancellor Rishi Sunak unveiled reforms to business rates which will help many businesses within the hospitality and retail industries. High street tenants have long complained about tax they face. Express.co.uk spoke to financial experts about the Budget 2021 and what it means for online retailers versus those with brick and mortar outlets.

There was talk of an Online Sales Tax ahead of Mr Sunak’s Budget announcement this afternoon.

The tax, dubbed the Amazon Tax, will see a charge of two percent for online retailers.

The Confederation of British Industry (CBI) has led calls for a major shake-up of the levy, arguing it unfairly disadvantages brick-and-mortar retailers compared to online rivals.

But wider reform was not unveiled by Mr Sunak on Wednesday.

The Shadow Chancellor Rachel Reeves criticised the Chancellor for failing to burden online giants with the financial burden of the Covid crisis.

She said the Conservatives were in charge “during this lost decade” which has left Rishi Sunak investing in services.

Ms Reeves told MPs: “And who is going to pay for it?”

She noted it is not international giants like Amazon, banks or property speculators.

She added: “Instead the Chancellor is loading the burden on working people.”

Mr Sunak announced companies in the retail, hospitality and leisure sectors will be given a 50 percent discount on business rates.

Pubs, music venues, cinemas, restaurants, hotels, theatres and gyms are all eligible.

Overall, the tax cut is worth £1.78bn.

The Chancellor said the move would make the system “fairer and timelier” and said revaluations would be made more frequent starting from 2023.

He said this tax cut “marks the biggest single-year tax cuts to business rates in over 30 years”.

The Government also introduced a new business rates improvement relief which will see every single business pay no extra business rates for 12 months.

Mr Sunak said: “Millions of businesses will see their tax bills rise without intervention.

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The Treasury announced plans to radically alter how business rates work last March – a few weeks before the first Covid lockdown.

High street shops claim to be heavily disadvantaged compared to eCommerce operations – due to large sums for shop fronts.

Alastair Wilson, a tax partner at accountancy firm MHA Tait Walker, said changes to businesses rates will benefit leisure businesses.

He told Express.co.uk: “The changes announced to business rates (involving more frequent revaluations, a 50 percent discount for rates for leisure businesses for 12 months and a relief for investment in improving properties all are measures which will be welcomed by high street retailers.”

The financial expert added the changes did not strictly address online retail or food retailers and would not tackle issues with lower cost bases and part of that is due to lower property taxes.

Mr Wilson told Express.co.uk: “Many businesses will still view that the real answer is either to fundamentally change business rates or to impose additional taxes on online business models to put them on a more equal footing.

“Many “bricks and mortar” businesses would view an online sales tax as a more sustainable way of ensuring that the physical and the digital economies can trade on comparable terms.”

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