Do you want an Online Sales Tax?

We’ve been doing our best to make some sense of the Online Sales Tax (OST) consultation that the government kicked off in late February. 

It was announced with the support of a fairly long winded (and it has to be said quite repetitive) document intended to give the debate some context, as well as outline how interested parties can feed in to the process. 

Before we go any further on the topic I am not expecting many of you to have waded through the document. And I am not in any way phishing for praise, but I did take one for the team and put some time aside to study it, so you didn’t have to.

The Context  

The first thing to mention, is that it is made very clear that the implementation of any form of Online Sales Tax would not be to secure additional revenue for the treasury, but to fund the ‘rebalancing’ of the Business Rates. In essence this would mean a reduction of the burden for High Street bricks & mortar locations, that many feel are disproportionally taxed in relation to the kind of industrial units that some online resellers operate from because of the difference in rental cost and rateable vale.

The second point is that the document doesn’t really express an opinion on the theoretical argument for or against an OST, instead it moves quickly past that point and seeks to engage on what an actual programme would like. As such the consultation breaks down in to three broad areas;

  1. Scope – what is an online transaction and how should it be defined. Should it be consumer only or include B-to-B sales.
  1. Design – what would any potential OST actually look like, and how would it be calculated and collected. Should it be based on revenue or flat fee.
  1. Impact – what would be the impact of introducing this form of taxation, both in terms of the direct winners and losers and also the long term impact on things such as innovation and consumer behaviour. What would the administrative cost of an OST.

The Process

The first thing to note is that completing this process will not be simple or quick. There are forty questions to respond to, answers need to be expressed in written form and the questions themselves are relatively technical and complex. The process does seem to be more about designing a potential solution, than seeking a cross section of opinion from the retail sector.

Secondly (and I almost can’t believe I am typing this) the document has to be completed and emailed in for submission, so yes it is a digital consultation but bizarrely considering the subject matter not an online one.

I could be cynical and suggest the design of this consultation is to discourage engagement, but I will leave that to you to make your mind up.

How can the MIA help.

You may have seen that we launched our own survey on this topic last week. Working with our partners at the BRC we have come up with a set of questions to help you, inform us, of your position on this matter. This will be pivotal to see if it is possible for us to submit a response on behalf of MI retail.

In addition to this I am due to take part in a roundtable event organised by the Treasury on Monday, to discuss the consultation and express the view of MIA Members. This is an additional opportunity to both take part in the process and direct comment to the relevant Government Department.

Why should I care.

Retail is already over taxed, proportionate to other sectors of the economy – delivering 10% of the tax revenue whilst representing only 5% of the GVA. The introduction of any subsequent tax into the sector should be well considered, in terms of its application and the outcomes it funds.

I appreciate this is an emotive and complex topic, but the more responses we get to the survey, the better understand your position and that is ultimately what I want to feed back on your behalf.

The link to the OST survey is here and you can read the full consultation document here.                          

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