Member Article

Business leaders in the Midlands calling for Business Rates to be replaced with an online sales tax

The government should replace Business Rates with an online sales tax similar to Digital Services Tax according to a poll of business leaders by accountancy and advisory firm BDO LLP.

A significant majority (84%) of respondents indicated that with businesses moving more towards online trading, a trend that has increased during Covid-19, much-needed revenue should be raised by taxing online sales.

Replacing Business Rates with an online sales tax is not the only area where respondents would like to see the government introduce changes. When asked what should be the top priority for government spending until 2025 once Covid-19 support measures are withdrawn, nearly three-quarters (71%) opted for ‘boosting businesses and jobs’. This is in stark contrast to ‘education and training’, which less than 4% of respondents opted for.

Opinions are divided on how the government can support the younger generation who are likely to bear the brunt of the post-Covid debt, with around one in three (32%) hoping that Inheritance Tax (IHT) will be simplified to help the older generations pass on their wealth. Instead, the priority for one in four (25%) would be to build more affordable homes for first time buyers.

Commenting on the survey’s findings, Richard Rose, partner and head of BDO LLP in the Midlands, said:“Business leaders are looking for the government to show that it will deliver on its promise in March to make the economy prosper despite the challenges faced by Covid-19. Of course, the Chancellor could not then have known the true impact of Covid-19.

“This survey shows that business leaders appear to deem it logical for digital companies to pay tax based on their online sales in order the help the economy recover. Our region has numerous great examples of world-class digital businesses and many have thrived throughout lockdown.

“There is widespread consensus that digital companies should pay more tax, but the key will be how while also balancing with encouraging ongoing innovation. International cooperation on digital taxes is the preferred solution of policy makers but it is proving difficult to achieve in practice so some countries including the UK have decided to introduce their own tax. Going it alone has dangers as other countries including the USA have threatened retaliatory measures; the Government will need to carefully consider its next steps.

“Business leaders are focused on the future and while the majority believes boosting business and jobs should be a top priority, from a personal tax perspective, this survey shows that many are concerned about the impact of Covid-19 on younger generations. Respondents are calling for IHT to be simplified to enable succession planning, or to see a sharp increase in house building to help first time buyers.”

This was posted in Bdaily's Members' News section by BDO LLP .