UKH and BBPA call for online sales tax

20-May-2022 - Last updated on 20-May-2022 at 09:19 GMT

Make-or-break moment: Government must give sector due consideration with proposed online tax (Credit: Getty/DragonImages)

UKHospitality (UKH) and the British Beer & Pub Association (BBPA) have shown support for the Government’s proposed online sales tax but warned the sector must be given due consideration to level the playing field and avoid double-taxation.

In its submission to the consultation, which closed today (Friday 20 May), the BBPA highlighted how the current system overtaxes pubs with UKH stating business rates remain one of the biggest barriers to recovery for operators trying to rebuild after the pandemic.

BBPA Chief Executive Emma McClarkin said: “Our current taxation system is not working for breweries and pubs.

“We are overtaxed and paying higher business rates than most other sectors, whilst online retailers reap the benefits of low taxation and a booming trade.

Rebalance the system

“If the Government wants to support pubs, the jobs they support and the role they play in their communities, they must do more to rebalance the taxation system, so pubs and breweries aren’t subsidising the digital economy’s fair share of tax.”

According to trade bodies, the current system means the sector is the highest taxed business sector in the UK, with business rates system having caused the industry to overpay by £2.4bn each year, an overpayment of 300% relative to its turnover.

The BBPA stated, therefore, an online sales tax would help make the taxation system fairer and ease the current burden Britain’s brewers and pubs face as well as being crucial for the regeneration of high streets and local communities.

While the treasury stated the proposed tax would fund a reduction in business rates, UKH warned an online sales tax must involve exemptions for services ordered online but delivered from a physical presence in person, for example hotel bookings and restaurant deliveries, to avoid a stealth ‘double-taxation’.

UKH chief executive Kate Nicholls said: “We are calling for an online sales tax to be introduced in the UK to cut business rates for high-street venues and deliver economic regeneration across the UK.

“The basis for an online sales tax must not stifle innovation and the development of online business models but must support our British high streets.

Make-or-break moment

“The taxation system has lagged way behind the changes to the modern economy and while we have long known that business rates is arcane and outdated, there is also an absence of an equitable system of justifiably bringing the digital economy into taxation.”

This comes as trade bodies and industry leaders, such as BBPA and Greater Manchester night-time economy advisor Sacha Lord, called on the Chancellor for a cut to VAT as inflation hit a 40 year high of 9%.

McClarkin said: “This is a make-or-break moment for our industry as we emerge from the pandemic, but with costs of everything from energy to food and drink soaring around us, it’s becoming increasingly difficult for businesses to get back on their feet.

“We need the Government to take action to save businesses before it’s too late.”