Posted: Thu 20th Jun 2013
You may have read in the news that the British Retail ConsortiumÂ (BRC) has proposed to the Treasury that an 'online sales tax' should be levied on ecommerce businesses, as an equivalent to the business rates paid by 'bricks and mortar' retailers. This, in our view, would be profoundly damaging to the UK's burgeoning ecommerce sector and to small enterprises in particular.
As it happens, we've received word from our equally concerned friends at **Tamebay.com**Â that the BRC is simply running a consultation of members and has yet to formulate any concrete proposals around online sales tax. Nevertheless, the idea has already been publicly endorsed by the chief executive of Sainsbury's, one of the BRC's biggest members. We'd like to see this idea put to bed right now -Â and, asÂ Dan Wilson, co-editor of Tamebay.comÂ and author of 'Make Serious Money on eBay UK' explains, these are the reasons why.
The British Retail Consortium (BRC) will be the first commercial organisation in history to propose a tax hike to benefit business if it comes out in favour of an online sales tax in the UK,Â writes Dan (left).Â If a losing runner said they could beat Mo Farah if he'd just been slower, would we then make our champion run in a suit of armour? Of course not. But that would be the effect of an online sales tax. Ecommerce has been a winner for many a year. Why hinder it?
We don't know exactly what the BRC might have in mind but they have told us that they are consulting with their members. If the BRC ultimately supports an online sales tax, it will show they don't understand British consumers in 2013, have no grasp of how vital ecommerce is to the British economy and reveal them to be a crusty old vested interest group with some pretty outdated notions in a fast moving world. Apparently, their reported concern is that ecommerce retailers don't have the same costs as High Street shops. Wrong. Plenty of ecommerce enterprises have commercial premises and pay business rates just the same as the big chains the BRC represents. Many of their own members, such as John Lewis and Argos, operate highly successful and profitable 'bricks and clicks' operations. An online sales tax would be a targeted attack that would hit small business and start-ups hardest. And it's exactly these entrepreneurs who are creating jobs and driving the economy forward right now. Ecommerce is vibrant and growing: it was worth Â£50bn in 2012. Ecommerce entrepreneurs are the "doers and strivers" the Prime Minister David Cameron has said he wants to encourage. Ecommerce businesses pay business rates, corporation tax, national insurance, income tax and VAT at 20 per cent, just as the law requires. It's worth noting that BRC member Starbucks came under fire recently for avoiding tax and offered to make a voluntary contribution. The Chancellor is still awaiting a cheque for Â£20m. If the government is serious about economic recovery, jobs creation and the UK being a hub and beacon for tech-based jobs and innovation, it must knock this idea on the head immediately. It would be a bonkers assault that will stop our best business people being brilliant. Dan Wilson is co-editor of Tamebay.com and the author of 'Make Serious Money on eBay UK'. Tamebay publishes the eBay & Ecommerce Tools & Services Guide.
A note from Enterprise Nation
We fully endorse what Dan has said above and believe an unwarranted tax on ecommerce businesses would simply be a punitive measure that could stop our world-leading ecommerce sector in its tracks. Rather than adding to the costs of running an ecommerce operation, policymakers and ministers should be looking to fund an even better ecommerce infrastructure in the UK.
We have a significant international advantage in ecommerce that could drive economic recovery -Â but only if it's nurtured in an intelligent way. Who knows which of the current crop of small eretailers will go on to become the next ASOS? We don't -Â which is why we have to back them all, instead of making it even harder to turn a reasonable profit. Enterprise Nation founder Emma Jones has already pledged to speak to senior figures in government about our concerns on behalf of the UK's thousands of small ecommerce businesses. And we and our colleagues at Tamebay are prepared to campaign vigorously should the BRC's consultation become a proposal. Photo credit: Daniel Broche via Compfight cc