Save high street by taxing online sales at higher rate, Burnham urged

The main proposal is to rebalance taxes between online sellers and physical shops. Andy Haldane says the current system favours digital businesses and large companies. He wants internet sales taxed more heavily and business rates reviewed. The aim is to help struggling high streets compete as shops face rising costs and falling demand.

One expected measure would force marketplaces such as Amazon and eBay to collect VAT for large UK-based and overseas sellers. This could raise up to £1bn. The government is also expected to increase the rent valuation threshold at which smaller businesses begin paying business rates. An IPPR proposal would use an online-sales tax to fund lower rates for high-street businesses.

The debate is unresolved. Warehouses used by online retailers already face higher taxes, but that change also affected department stores and hotels. Retailers warn that online and physical operations are increasingly combined, while UKHospitality fears possible US retaliation against American technology companies.

Business rates are taxes charged on occupied commercial property. They affect shops because retailers need premises on high streets, and the tax is linked to the value of those properties. When rents, wages and other costs rise, the rates bill can become especially difficult for smaller operators. Haldane called them “punitive for smaller shops”.

Online retailers also use property, including warehouses, but their business model is less dependent on customer-facing shops in town centres. The article notes that taxes on warehouses used by online retailers were increased in April. However, the change also caught valuable department stores and hotels, showing how difficult it is to target one business model cleanly.

This difference matters because tax costs can shape prices, investment and where businesses operate. Haldane argues that the balance currently favours digital businesses and large companies. A rates review, possibly funded by an online-sales tax, could give smaller physical retailers more room to compete.

The high-street problem is presented as broad and serious. Many town centres have been hollowed out after years of decline. Shops are closed, buildings are boarded up and once-busy hubs are empty. The article also links rising vacancy rates with stronger support for Reform UK, suggesting that economic decline is affecting local politics.

The supplied text mentions polling by More in Common for Power to Change. It says the research shows the scale of the challenge and begins, “Whereas most people describe their local area w”, but the excerpt ends there. It therefore does not provide a percentage, sample size or number of people who want communities to have more power.

The policy response centres on local control. Burnham supports giving local leaders more power and money, while Labour has launched a £5.8bn “pride in place” strategy. The available evidence supports the urgency of action, but not a precise public-support figure.

A higher tax on internet sales is intended to narrow the cost gap between online businesses and physical shops. If the money funded lower business rates, struggling high streets could gain relief. The article points to an IPPR proposal using online-tax revenue for that purpose. It also says a marketplace VAT crackdown could raise up to £1bn.

The immediate mechanism would be higher tax collection from online marketplaces or sellers. That could increase retailers’ costs. Businesses might absorb those costs, reduce margins, or pass some of them to consumers through higher prices. These are possible effects of taxation, not outcomes confirmed by the article.

The policy could also create wider consequences. Allen Simpson warned that taxes affecting large US-based firms such as Amazon and eBay might provoke US retaliation. Retailers also caution that many large chains now combine online shopping with high-street stores, making a purely online tax harder to target fairly.

Andy Burnham is presented as the prime minister leading a town-centre revival agenda. He has promised to replace the business-rates system, announced cuts for pubs, clubs and live music venues, and supports giving local leaders more power and funding. The article also refers to his manifesto promise and June commitment on small businesses.

Andy Haldane is the president of the British Chambers of Commerce and a former Bank of England chief economist. He advised Burnham while Burnham prepared to enter Downing Street, but held no formal government position. Haldane is pressing for higher taxation of internet sales, a business-rates review and stronger devolution.

The UK government is preparing the budget and a refreshed high-streets strategy. John Healey, identified as the chancellor, is expected to introduce a marketplace VAT crackdown and changes to the business-rates threshold. Ministers must balance town-centre support with retailer concerns and possible US retaliation.

The article presents several alternatives to simply taxing online sales. The biggest is a fundamental replacement or redesign of business rates. Haldane says smaller shops face punitive bills, so reducing or reshaping those costs could directly support high-street operators. Raising the rent valuation threshold would remove more small businesses from the system altogether.

Local ownership is another route. Labour has introduced community ownership funds, which can help communities take control of valued local assets. The government has also announced a £5.8bn “pride in place” strategy. In addition, Burnham’s devolution agenda would transfer more money and decision-making power to local leaders.

These measures target different parts of the problem. Rates reform changes business costs. Community ownership can protect local facilities. Devolution lets local leaders shape regeneration around local needs. The article says ministers are preparing a refreshed high-streets strategy, so these approaches could be combined rather than treated as competing choices.

Physical shops need visible premises where customers can browse and buy goods. Those properties carry business rates, and their costs can rise even when footfall and demand fall. This makes the tax burden immediate for high-street retailers. Haldane says the system is especially punitive for smaller shops.

Online retailers organise sales through websites and marketplaces, with goods often handled through warehouses rather than many town-centre outlets. The article notes that warehouse taxes were increased in April, but also shows the problem is not simple: many large chains now combine online operations with high-street stores. A tax aimed at warehouses can therefore affect mixed retailers too.

The result is a perceived competitive imbalance. Haldane says tax incentives are skewed towards digital businesses and large companies. His proposed response is to rebalance taxes, review business rates and possibly use online-sales revenue to reduce costs for physical shops.