Tesco CFO Alan Stewart has sent a letter to the C-suite leaders of rival bricks-and-mortar retailers, drumming up support for an online sales tax, it emerged on August 12.
According to the Press Association, Stewart has sent the letter to the senior leadership of at least three major supermarket chains in the U.K.
The supermarket chain’s CEO Dave Lewis wants the Government to cut business rates–a U.K. tax on non-domestic property—by 20%.
Stewart’s letter also suggests the government make up the shortfall with a 2% levy on all online retail sales.
Other, non-grocery retail leaders have also seen the letter, the PA reports.
According to sources for the publication, Lewis has been speaking to retailers at industry events in a bid to win over their support.
The Tesco chief has attempted to lead the charge on business rates, following years of pressure and campaigning from the industry to overhaul the system, which charges rates on every commercial property in the country.
Tesco isn’t the first to propose an online sales tax.
The concept has been revived in public conversation over the past year, as a number of physical retail chains fell into administration and Amazon continued to thrive.
In August 2018, Chancellor Philip Hammond suggested the idea in a Sky interview, then deeming it an “Amazon tax.”
In February this year, a parliamentary inquiry on high streets and town centers, led by Labour MP Clive Betts, published a report suggesting an online levy, among other proposals for reviving the U.K. high street.
In addition to the online sales tax, the Housing, Communities and Local Government Committee also recommended a replacement of business rates with a sales tax or an increase in VAT.
However, an online sales tax alone might not be a bricks-and-mortar panacea, according to some industry experts.
“While it may be the case that the tax system could do with a review to update it for the digital age, it does not, in isolation, represent a solution to the problems experienced on the high street – the scale of change is more fundamental than that,” said Andy Mulcahy, strategy and insight director at IMRG, a U.K. association of online retailers and physical retail chains with significant online businesses.
“Online offers complete choice, access and availability, whereas physical locations, by comparison, have many constraints. If the goal is to ‘tax’ people back onto the high street, then it would seem like a backward step—people won’t stop shopping through their highly convenient smartphones. If any tax reform is not part of a wider strategy for making U.K. high street retail appropriate for the 21st century, it will represent a missed opportunity,” Mulcahy added.