Theo Paphitis, owner of lingerie firm Boux Avenue, has announced his support for the Chancellor’s proposals to introduce a digital tax on businesses.
The retail tycoon said that the Exchequer needs to find some way to receive income from digital business.
Paphitis said: “I’m expected to pay more in rates in my shops even where fewer people are coming in. Around 15% of my shops now pay more in rates than rent.”
“I’ve seen calculations which show that with a small amount of sales tax we could reduce the rates bill for retail quite tremendously and keep the Treasury happy. It would also mean we could keep the social fabric of our high streets and town centres together – which so many politicians talk about as being important. But their actions are not matching the talk,” he told The Mail on Sunday.
Retailers are divided on the government’s proposals, which are designed to level the playing field for business rates amongst UK companies.
Chancellor Philip Hammond introduced measures to ease the burden of business rates revaluation on smaller businesses, and added that the UK needed “to find a better way of taxing the digital part of the economy – the part that does not use bricks and mortar”.
Many in the retail industry, including the lingerie sector, have supported the proposals which will revise the tax paid by larger online retailers like Asos and Amazon, who hold huge chunks of the lingerie industry with few physical sites.
However, the British Retail Consortium (BRC) has reportedly criticised the plans.
According to The Mail on Sunday, the BRC stated: “An online sales tax is not the answer. That makes no sense when so many retailers are online or want to move online.”
Philip Hammond’s budget announcement last week unveiled plans for a £300m pot to be set aside for local councils to help small businesses face the hike in business rates.
This was welcome news for many smaller lingerie retailers, but larger firms with multiple sites are bracing for a hefty thump as the rates come into effect in April.