Online sales tax to add £175 to consumer outlay annually - report

By

Nigel TAYLOR

Published
Jun 21, 2022

Plans for a new UK online sales tax should be abandoned on the basis that it would add to inflation while the related costs would be passed on to the consumer anyway.

That’s the view of a joint think tank comprising the Centre for Policy Studies and the Coalition for a Digital Economy.

They claim Britain’s poorest households could see their annual spending rise by £76 a year as prices rise, according to the combined study, while the average household would be faced with £175 in extra outlay.

That would harm household finances without giving any serious support to the high street businesses which are meant to be the beneficiary of the policy, the bodies claims.

“My hope is that they wouldn’t be silly enough to introduce a new consumer tax at a time like this,” Tom Clougherty at the CPS told The Telegraph newspaper.

Clougherty’s report warns that “introducing an online sales tax would be complicated, expensive and distortionary.”

The CPS added: “Whatever the intention behind it, an online sales tax is bound to burden small businesses and increase prices for consumers. It would be a retrograde step in the Government’s campaign to fight inflation and cut the cost of living.”

Clougherty said he would prefer the government to reform and cut the existing tax system to help companies and their customers.

“Business rates are a real problem and you need a real solution - an online sales tax is not what you are looking for,” he said.

The Treasury has consulted on the idea of an online sales tax and is expected to decide on its course of action at the time of the Budget in the autumn.