Key facts
- Tax internet sales at a higher rate than physical shops to help high streets.
- Business rates are seen as punitive for smaller shops.
- A tax crackdown on online marketplaces could raise an extra £1bn.
- Mayors may be allowed to retain a share of income tax.
- The government has cut business rates by 20% for pubs, clubs, and live music venues.
Former Bank of England chief economist Andy Haldane has urged UK Prime Minister Andy Burnham to implement a tax system that favors physical stores over online retailers. The proposal aims to revitalize struggling high streets by rebalancing tax incentives and reviewing business rates, with potential measures expected in the upcoming budget. Haldane suggested that internet sales should be taxed at a higher rate than those in physical shops to "level the playing field" for smaller businesses facing soaring costs and declining demand. He also called for a fundamental review of business rates, which he described as punitive for smaller shops. Chancellor John Healey's upcoming budget is tipped to include measures to ease pressure on high streets, such as a tax crackdown on online marketplaces like Amazon and eBay, potentially raising up to £1 billion. The Treasury is also reportedly interested in a report advocating for an online sales tax to fund lower business rates. Some retailers have expressed concerns about potential US retribution if taxes on large US-based tech firms are increased.