10/08/2018 13:46 BST | Updated 10/08/2018 16:19 BST

Chancellor Philip Hammond Considering 'Amazon Tax' For Online Retailers

A levy could be introduced even if other countries do not follow suit.

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Chancellor Philip Hammond has hinted he may introduce a so-called Amazon tax in a bid to rescue the UK’s ailing high streets, just as House of Fraser was rescued in a last-ditch deal.

Hammond told Sky News he is weighing up the benefits of a special tax on online retail giants – and indicated he could press ahead even if other countries don’t agree to follow suit. 

Hammond also signalled that the high street needed to reform to be more in step with demand. “We’re changing our shopping habits,” he said.

The first half of 2018 has been marked by retail job losses, with around 50,000 roles thought to have been lost or at risk. 

“More and more of us are buying online,” Hammond said. “Indeed, Britain has the biggest percentage of online shopping of any major developed economy. That means the high street will change.”

Hammond said the changing nature of the high street mean there will in future be less retail, and more leisure, bars and community facilities. 

Poundworld, Maplin and Toys R Us have all gone bust this year, with several other firms such as Mothercare, Carpetright and New Look undertaking store closure programmes.

House of Fraser was bought out of administration by Mike Ashley’s Sports Direct on Friday and is the latest in a long line of well-known names to hit trouble.

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Hammond refused to be drawn on any shake-up of business rates, but said the country needed a new set of taxes to tackle online businesses, which tend to pay far less than their high street competitors.

“We want to ensure that taxation is fair between businesses doing business the traditional way and those doing business online,” he said.

“That requires us to renegotiate international tax treaties because many of the big online businesses are international companies.

“If we can’t get international agreement to do this we may have to look at temporary tax measures to rebalance the playing field until we can get international agreements.”

Pressed on which kinds of measures, the chancellor said: “The EU has been talking about a tax on online platform businesses based on value generated.

“That’s certainly something we’d be prepared to consider.”

The Federation of Small Businesses said it wanted to see a “more level playing field for our small high street retailers” but was concerned small retailers would be clobbered by a new tax also. 

National policy chairman Martin McTague said: “Many of these firms are desperately trying to keep their heads above water as they battle rising business rates, high employment costs and reduced footfall.” 

“Too often the tax system favours big online-only retailers over the small shops that are at the heart of our communities.” 

He added, however, that the Government needs to remember small retailers have an online presence.

McTague said: “Any additional levies for online platforms need to be very carefully thought through, otherwise we risk placing yet another burden on our small high street retailers who often use the web as a complement to their bricks and mortar stores. Equally, no kitchen table businesses should be caught up in this.

“Small shops would appreciate far more support when it comes to business rates, employment costs and navigating the nightmarish VAT regime. The Chancellor needs to remember that these issues are front of mind for thousands of businesses.”