UKHospitality | BBPA

Call for UK online sales tax

The current taxation system is not working for breweries and pubs, says Chief Executive of the British Beer and Pub Association Emma McClarkin. The BBPA and UKhospitality call for the introduction of an Online Sales Tax to level the playing field.
IMAGO / Xinhua
The current taxation system is not working for breweries and pubs, says Chief Executive of the British Beer and Pub Association Emma McClarkin. The BBPA and UKhospitality call for the introduction of an Online Sales Tax to level the playing field.

The leading industry trade body in the UK, UKHospitality, urges the Government to introduce an online sales tax to reduce business rates for hospitality. In its response to the Government’s consultation on the introduction to an online sales tax, UKHospitality says that due consideration must be given to property-based industries such as hospitality.

The trade body’s submission also calls for such a tax to be ear-marked to provide a targeted reduction to business rates for high street businesses. Business rates remain one of the biggest barriers to recovery for operators looking to rebuild following the pandemic, and the current system results in the hospitality industry overpaying by £2.4bn each year - an overpayment of 300% relative to its turnover.
 
An online sales tax must involve exemptions for services that are ordered online but involve delivery from a physical presence that delivers that service in person, for example hotel bookings and restaurant deliveries, so as to avoid a stealth ‘double-taxation’.
 
While UKHospitality says an online tax should also be based on revenue through relevant online sales, it also specifies that the system must be designed with an allowance below which no tax is levied. It also calls for rates reductions to be achieved via a reduced multiplier for all relevant businesses and not focused solely on smaller businesses, as this is done through the Small Business Rate Relief.
 
UKHospitality 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. This is why Government must ensure that an online sales tax avoids double taxation for businesses that deliver product on-premise, such as pubs, restaurants and hotels.
 
“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.”
 

“Brewing industry is the highest taxed business sector”

In its submission to the consultation, the British Beer & Pub Association highlights how the current system overtaxes pubs, that the brewing industry is the highest taxed business sector in the UK, and how an Online Sales Tax would help to make the taxation system fairer and ease the current burden Britain’s brewers and pubs face.  It also sets out why an OST is crucial for the regeneration of high streets and local communities.
 
However, the BBPA highlight that any new tax must be ringfenced and not “become simply another revenue source”, but instead be created, and contained, for the purposes of bringing down the overall costs of business rates for the sector. They call for Government to ensure the sector is no worse off through an addition of a new tax.
 
The Government consultation has sought views from across all sectors on the possible introduction of an Online Sales Tax to rebalance the taxation of the retail sector amidst the continued rise of online retail.
 
Chief Executive of the British Beer and Pub Association 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.
 
“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.”
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