A blog from our founder Martha Keith.
Yesterday I was lucky enough to be invited to No 10 Downing Street to speak with the Prime Minister’s Special Advisor. The visit came about after voicing my thoughts on the proposed ‘Amazon tax’ back in the summer, which was picked up by Emma Jones, founder of Enterprise Nation who asked me to come along with some other entrepreneurs and bring with us ‘the one thing you would do if you were PM for the day’. So, what would I do? I would create a taskforce to look into regenerating our high streets and ensure that no extra tax for online businesses is added to next week’s budget. Here is a bit more detail on what I shared.
Back in August the chancellor proposed an additional tax for internet businesses to ‘ensure that taxation is fair between businesses doing business the traditional way and those doing business online’, which has gained momentum in the press and whenever he speaks. You may have seen me post a couple of times about it here and here.
However, I think we are looking at this in the wrong way and here is why:
Firstly, internet shopping is not bad for the economy, it is brilliant for the economy. Like it or not, the way we as a society shop is changing and we are are increasingly going online for goods and services, and this has been amazing for enterprise. Small businesses like mine have been popping up all around the UK, leading to growth in the economy and jobs. In fact, the UK is currently only behind the US as a place to start and grow a business and 30% of the UK micro enterprises are commerce businesses. Internet shopping is not just good for business, it is good for the 17% of people in rural communities who can’t access shops plus disabled people like my father who can’t get to shops.
Most ecommerce businesses already pay their way in tax. Small independent businesses like mine who operate online already pay our fair share of tax (VAT, corporation tax, business rates etc) as well as having to invest in additional marketing spend to make up for not having a bricks and mortar presence so that customers can find us. The issue here is not us, it is multinational conglomerates like Amazon who sell in the UK but domicile elsewhere so they don’t even pay their fair share of corporation tax. This is what we need to focus on, which is an international issue. Talking of fairness, what about the service industries? Look at banking, online banking has revolutionised the way we manage our money – when was the last time you actually went into a bank on the high street? Are you going to tax that as well, or just those that sell goods online that undoubtedly have higher overheads?
What we really need to focus on is remodeling our high streets. Our struggling high streets is the whole reason this discussion was started in the first place, but this is not about them being in competition with online, we need to evolve what our local towns offer instead of looking for a replacement shop to fill that boarded up shop front. Instead we should be asking ourselves, what can towns offer that online cannot? We should be focussing on making them an experience (the demand for which is a growing industry), a place where you can socialise, get food and drink and try and see new things alongside the retail component – all things you cannot get from sitting in front of a screen. We should be replacing boarded up shops with affordable housing so that local communities can start thriving again. An online tax in itself is not going to make people shop on the high street again.
And yes, we need to take a serious look at business rates. Small shops pay far too much, some companies pay nothing at all. The chancellor would be right to focus his energies here – you will never get our high streets thriving again if you are charging businesses an extortionate amount for being there.
So, in summary, if I was Prime Minster for the day, I would recognise that the changing UK retail model is a far bigger issue than the chancellor can tackle with a simple online tax. Online retail is brilliant for business. Britain wants to be open for business – why would we want to be the first country to impose an online tax? Instead, I would be focusing on the much more complex issue of regenerating our high streets and creating a different long-term sustainable model.
Phew! I didn’t quite manage to fit all of that in, so I have since contributed further via email and we will see what the result is. I’d love to know what you think of the proposed tax for online businesses – good idea or bad idea?