What? Politicians talking (some) sense?

Last week I worked my way through an 80 page parliamentary report on our town’s high streets.

Last week I worked my way through an 80 page parliamentary report on our town’s high streets.

The task of the report was to consider how to future proof these traditional retail areas to ensure they’re still thriving in 2030. And there were lots of positive ideas. For example, relaxing rules on use class orders to make it easier for units to offer multiple services. (Look out for the offer of Italian language classes with your next espresso.)

Another focus was on brands and retailers making the in-store experience more engaging for consumers, giving them a reason to head into town. It’s good to see the concept of experiential retail – something we’ve been talking about for a while at Mash – getting recognition in this way.

However, much of the report focuses on the existential threat of online shopping and I wonder if we need to be careful about how we approach this.

At the moment, the retail industry is responsible for 5% of GDP but pays 25% of business rates, and the pressure this puts on high street retailers is clear. This property-based tax was introduced before the rise of digital so it’s not surprising that there are winners and losers in the current era.

A number of suggestions were made for how to resolve this issue and many of them involved increasing sales tax. One idea was a digital sales tax for all online shopping. Another was an increase in VAT. And a third was a blanket 1-2% tax on all retail sales (although through my novice eyes, I can’t quite work out how that differs from VAT).

But what strikes me about all of these ideas is how easy they are to pass onto the consumer. They are so directly linked to the retail price that it feels like a natural step to just add the 1 or 2% on to that – simple in both implementation and as a way to protect margin.

However, there were a few other ideas that seemed to have real potential for both greater fairness and reviving the high street.

The committee suggested creating a new, distinct calculation for the business rates of distribution centres (something that already happens for pubs and restaurants). Amazon currently pay 0.7% of their turnover on rates compared to 1.5% for John Lewis or 2% for M&S. This feels like a logical way to even things up a bit.

They also suggested a ‘green tax’ based the amount of packaging retailers use and delivery mileage. Obviously this would need fleshing out more, but anything that changes behaviour to support the environment feels like a positive step.

But perhaps the most interesting idea for reviving the high street was a tax for businesses that do over 80% of their sales online. Initially I was against the idea – it felt like a barrier for small businesses to grow their market.

But then I considered it less as a tax, and more as an incentive. What if it encouraged those online-only businesses to do 20% of their sales face to face? For medium sized operators, that could be a series of pop up shops. For smaller ones, local fairs or markets – or even a joint venture championed by the local town council.

And if the bigger players like Amazon and ebay had to pay a little more tax? Well, maybe that wouldn’t be the end of the world.

Mac Glassford

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