Rishi Sunak, UK Chancellor of the Exchequer, is reportedly looking into introducing an online sales tax to help rebalance the scales between online retailers and the traditional bricks and
mortar high street.
While the idea is not new, the conclusion to the Treasury’s fundamental review of business rates, which references an online sales tax, is expected to be released ahead of the Spring Budget on 3 March 2021.
It comes as the disparity between taxes for physical and online stores has been highlighted by the acquisition of high-street brands Debenhams and Topshop by Boohoo and ASOS, where they’ve bought the trade names but not the physical stores.
On Tuesday (9 Feb) Boohoo also confirmed it would acquire the Dorothy Perkins, Wallis and Burton brands for £25.2m, however, both Boohoo and ASOS saw their share prices dip over concerns of additional taxes.
The coronavirus pandemic has hit non-essential retail hard, with overall retail sales down 1.9% in 2020 compared with 2019. While the number of high-street names going into administration has increased, online
retailers have seen sales soar by 46.1% year-on-year.
Traditional shops have to pay business rates on their properties and while a payments holiday was introduced during the pandemic, Altus Group estimates that lower retail sales in 2020 would have led to traditional shops facing a business rates bill equivalent to 2.9% of their turnover. In contrast, Amazon saw its UK sales rise more than 50% in 2020, yet its business rates to turnover ratio was just 0.4%.
However, while the idea is supported by several large retailers including Tesco and the owner of House of Fraser, Mike Ashley, business groups have warned it could simply increase prices for consumers and could hit those high-street shops with online operations.
US toymaker Hasbro saw its share price rise in early trading on Monday (8 Feb) after its fourth quarter results beat analyst expectations, driven by sales of its Star Wars and The Mandalorian merchandise.
Hasbro reported net earnings in the final quarter of 2020 of $105.2m as it benefited from more people at home and an extended holiday season with strong consumer demand in October and November.
In particular, Hasbro saw growth in key franchises such as Monopoly and Nerf, but its partnership with Disney proved most beneficial with revenues from Star Wars growing nearly 70% despite it being the first year without a cinema release since 2014.
This was driven by the release of The Mandalorian, with The Child products (also known as Baby Yoda) a particular success, especially in the plush toy category.
Steps to make air travel more climate friendly moved closer this week; the Dutch airline KLM reported the world’s first flight using synthetic fuel while British Airways is to invest in new plants producing sustainable aviation fuel (SAF).
On Monday (8 Feb) KLM confirmed it had completed a flight from Amsterdam to Madrid in January using a combination of regular fuel and 500 litres of synthetic kerosene produced by Royal Dutch Shell.
This was followed on Tuesday by British Airways announcing plans for transatlantic flights using SAF as early as 2022, as it unveiled plans to invest in a US plant run by LanzaJet that aims to produce SAF made from agricultural waste.
British Airways said the fuel would create 70% less carbon emissions than regular jet fuel and is the latest step towards its parent company IAG’s goal of becoming carbon neutral by 2050.
