Asda joins retail giants in rejecting online sales tax | City & Business | Finance
The supermarket giant was one of several retail groups to meet Lucy Frazer, the Treasury’s financial secretary and minister responsible for tax policy. The government is assessing responses to its consultation on introducing a corporate action, which it closed in May. John Lewis reiterated his opposition to an OST, while Asos reportedly said it would punish consumers at a time of increasingly tight budgets.
E-commerce giants Amazon and eBay reportedly warned Frazer that it would hurt the prospects of the more than 360,000 small and medium-sized businesses that use them to trade online.
They added that an OST, which could be set at one or two percent of the value of online sales, would stifle innovation.
Another source briefed on the talks said one of the retailers in favor of an OST undermined their argument by asking the government to make exceptions for click-and-collect.
Companies like Tesco, Sainsbury’s, Co-op, Morrisons and Kingfisher are pro-tax and believe it could fund corporate rate cuts.
A Treasury spokesman said the government’s review of business tariffs will see £7bn of support provided to reduce the impact of the tax over the next five years.
He added: ‘We have not decided whether or not to proceed with an online sales tax. The purpose of the consultation was to examine the design options and economic impacts of such a tax and to explore the arguments for and against.
According to Asda, the average household had £202 a week to spend on discretionary items in May, up from £205 in April.
This is the seventh consecutive monthly decline in discretionary purchasing power.
He added that the disposable incomes of the poorest households have been wiped out, leaving them with a weekly deficit of £58, due to inflation and the withdrawal of the Universal Credit hike.
Asda says the cost of living crisis is changing the behavior of its customers, with 44% buying more during promotions, while 41% are buying less in a bid to save money.
Elsewhere, new data from the CBI suggests private sector growth slumped in the second quarter.
He said the consumer services sector contracted 41%, the biggest drop since February 2021.