The Network Group MD asks: “Why not give a reduced 15 per cent VAT rate for my local retailer and leave the rest of the online world at 20 per cent."
It's Friday morning and I’m on a train from London back to Wales when the front page of The Times on a nearby table with the headline ‘Tax Amazon or it will kill us off says John Lewis’ catches my eye.
It seems Ian King is one more journalist ranting about Amazon, Starbucks and the likes using creative (yet legal) ways to avoid paying corporation tax here in the UK.
The article got me thinking: if I was Mary Portas what would I do to fix the High Street? Better still, if I was David Cameron what would I do to fix a broken retail market here at UK PLC?
Let’s face it, retail here is in a bad way. Whilst some companies in niche markets, certain locations or those with an unique proposition are winning, your average small business retailer that’s still doing what he’s always done for the last 20 years is really struggling.
Quite frankly, he’s being shafted out there. Shafted by his local authority who are charging him four times the rates for the same square foot that his online.com competitor is selling from. Shafted by the Government who impose all the employment legislation and NI contributions on him because he can’t play with the big boys and offer 16 hours a week or less to three part timers instead of one full time employee. Shafted by the law that insists that consumer rights trump distance selling and so he’s exposed to all kinds of refunds and rights that Joe Bloggs can demand if he knows how to play the system.
If I was in Number 10, I’d certainly level the playing field using VAT. There are certain products and services that have varying VAT rates for the same thing. McDonalds charge me a different price for a burger depending on whether I eat in or eat out. My clothes have VAT on them; clothes for my children do not. Oil for my home has five per cent VAT; oil for my car has 20 per cent VAT.
Why not give a reduced 15 per cent VAT rate for my local retailer and leave the rest of the online world at 20 per cent? I’d gladly rush down the High Street and buy that 50-inch telly I’ve been drooling over. At 15 per cent VAT for retailers, a £3,000 TV on Amazon would be £2,850 at John Lewis and probably £2,800 at my local independent retailer who would also give me top advice, great service and after sales support no-one else could compete with. Result!
Phylip Morgan is MD of Network Group.
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