Amazon could be required to pay higher business rates in a bid to tackle the online retail giant’s impact on the high street, a government minister has said.
Jake Berry, parliamentary under-secretary of state at MHCLG, appeared before the communities and local government select committee earlier this week to answer questions as part of an inquiry into the future of the high street.
Committee chair Clive Betts (Lab) cited correspondence from Amazon which revealed the amount of business rates paid by the online retailer in the UK.
Mr Betts asked: “Is it fair, minister, that Amazon pay only £63m in business rates on a total UK revenue of over £8bn?”
Mr Berry replied: “It doesn’t seem that is creating a level playing field to me.”
Earlier in the session, Mr Berry had faced questioning from Labour MP Helen Hayes. “We have received considerable evidence for a levelling of the playing field between bricks and mortar and online retailers,” she said. “Don’t you agree that an intervention of this kind is needed?”
Mr Berry said: “I do. That’s why I support the government coming forward with a digital service tax in the Budget. I think that is in some ways levelling the playing field.”
The digital service tax is a 2% levy to be applied to the revenues of search engines, social media platforms, and online marketplaces. It is expected to raise £1.5bn over four years.
Mr Berry said the government was also considering options including levying business rates on retail warehouses at the same level as high street shops.
However, he warned against oversimplifying the issue as a battle between internet retailers and the high street.
“Many businesses I have visited sell both online and in the shops. And we have to be clear that businesses like Amazon are a platform and support many smaller retailers as a route to market.”
Mr Berry pointed to a government review of business rates that took place in 2016 and said any further reforms would be a matter for the Treasury.
Committee member Kevin Hollinrake (Con) told Mr Berry that existing plans to reform business rates retention meant “in the future business rates are going to become ever more important to local authorities”.
Since April 2013, local government has retained 50% of the national business rates income.
The government has announced its intention for this figure to be increased to 75% in 2020 and is piloting 100% retention in a number of areas.
Analysis by the Institute of Fiscal Studies last year found that areas involved in 100% business rates retention pilots could collectively gain an extra £873m funding in 2018–19.
However, the study’s authors noted that some areas would be better off were money redistributed nationally instead.