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May 19, 2022

Online sales tax threatens High Street growth, says M&S finance boss

UK retailer Marks & Spencer (M&S) has expressed its concerns over the potential introduction of an online sales tax, arguing it would damage the High Street.

By Hannah Abdulla

In a letter to the Chancellor, excerpts of which have been seen by the BBC, M&S financial officer Eoin Tonge says the introduction of an additional tax on an already stretched retail sector would simply mean “retailers cut their cloth accordingly.”

Tonge reportedly said the additional tax burden would present a further barrier to retailers who are trying to invest in what is needed to survive and grow in the modern digital era.

Consultations on an online sales tax to gather evidence and inform government policy on the proposal have been underway since February. The government is looking at it as a means to rebalance the taxation of the retail sector between online and in-store retail.

Tonge expressed concern that the least profitable parts of a business would suffer first and in the case of multi-channel retailers, this is more often than not High Street stores.

The M&S finance chief added an online sales tax would only serve to “damage shops and High Streets further,” according to a report published by the BBC.

In a statement to Just Style, a spokesperson citing content from the communication between Tonge and the Chancellor, said: “Far from levelling up, an online sales tax would lock us down. It would make it even harder for the retailers the consultation is purportedly trying to help to invest in the digital transformation required to survive and grow in the modern, digital era. The solution we need is practical, pragmatic reform of business rates and better taxing of global players to ensure everyone pays their fair share.”

Yesterday (18 May), industry experts from the British Retail Consortium (BRC) and GlobalData told Just Style, UK clothing spend is expected to plunge in the coming months after inflation hit a 40-year high at 9%.

The hike in inflation means the cost of everyday items such as food, fuel and clothing will go up for consumers across the UK.

The BRC explained higher energy prices along with a tight labour market, and the huge costs of moving goods around, are impacting all retailers. Rising inflation and falling consumer confidence is likely to hold back consumer spending on items like clothing, the body added.

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