Chancellor Rishi Sunak is set to shelve plans for the new 'Amazon Tax' on online sales until Autumn, as he announces a set of proposed changes to the country's taxation system. The pandemic saw a soaring growth in online shopping, prompting calls for a new levy on transactions made over the internet. Treasury officials are said to be working on it since last summer. Supporters of the move justify it as a levelling of the field with brick-and-mortar retailers who pay business rates on their premises.
A report by the Financial Times states Sunak's final decision on the online sales tax will have to wait until later this year. He is reportedly in talks with the new US administration about coordinating an international approach to the taxation of these internet giants. Sunak has also been weighing up reforms to discourage polluting activities and push up investment in green technology. It could include VAT exemptions for building refurbishments, paid for by higher taxes on aviation or heating.
A media report quoted Matt Kilcoyne of the free-market Adam Smith Institute as saying, “The Treasury is right to park any introduction of an online tax on the disabled and those currently staying at home doing the right thing.”
A levy of 2 per cent on goods bought online could raise £2bn each year. On the other hand, business rates, which are a prime source of revenue for the government, generates about £30bn. The move will seriously impact US tech giants, and had even prompted the previous US president Donald Trump to walk out of negotiations last year. Sources reveal the Biden administration has sought to soften its stance.
