Online sales tax

[japancool]

The Sunday Times reports that internet giants have been summoned to discuss the online sales tax with the Treasury.

https://www.bbc.co.uk/news/blogs-the-papers-55967427

I know this has been discussed here before. I fear that the little guys are going to be swept up in this, being hit with the same rules as the likes of Amazon.

Someone needs to make urgent representation to whoever matters to make the sales tax only apply above a certain threshold. Some of us can't raise prices, we're competing with overseas sellers who already have big advantages. It's tough enough in the online world without Rishi Sunak trying to steal our profits.

 

[Mr D]

The Sunday Times reports that internet giants have been summoned to discuss the online sales tax with the Treasury.

https://www.bbc.co.uk/news/blogs-the-papers-55967427

I know this has been discussed here before. I fear that the little guys are going to be swept up in this, being hit with the same rules as the likes of Amazon.

Someone needs to make urgent representation to whoever matters to make the sales tax only apply above a certain threshold. Some of us can't raise prices, we're competing with overseas sellers who already have big advantages. It's tough enough in the online world without Rishi Sunak trying to steal our profits.

Amazon typically pass any increased costs onto sellers and customers. Whether the sellers pass it on or pay it - or indeed pay double by paying for themselves plus Amazon increased fees - is open to question.

Easiest way to deal with increased taxes is pass them on. Customers pay it.
Same as they do all the other costs of businesses.

Businesses have benefited considerably from government money tap in past 12 months. And we are the easy target for raising more money for the treasury.
Just a Stealth Tax for the customers.

If you cannot raise prices then you may well suffer from dozens of businesses increasing your costs to pass the tax on. Reduced profits means reduced corporation / income tax.

 

[japancool]

Then raise VAT and be done with it.

Most ecommerce companies aren't the ones who benefitted from rates relief. Why do we have to be the ones to bail the bricks and mortars out?

 

[Mr D]

Then raise VAT and be done with it.

Most ecommerce companies aren't the ones who benefitted from rates relief. Why do we have to be the ones to bail the bricks and mortars out?

Because we are the ones capable of not having rates relief.
Which is part of the tap that will be switched off.

Then back to the usual large costs for them lower costs for us.

 

[thetiger2015]

Then back to the usual large costs for them lower costs for us.

I still question this....for small start-ups, yeah, the costs are generally lower, kind of, but not really.

If you're a start-up, your possibly paying higher costs per unit on stock, materials, packaging, shipping.

For businesses that are established, the costs are higher in a different way to retail. We have a warehouse, we have huge packaging/distribution costs that nobody seems to ever take in to account.

I see a lot of people commenting on Twitter etc. Saying things like 'Yeah, tax Amazon, they never pay any taxes' <<< they don't seem to understand that Amazon is made up for independent sellers, who battle each other on pricing, delivery and customer service to try and get customers. The battle is on a national or international scale, whereas your local tshirt shop is only competing locally.

There's also a question mark over businesses that sell online and in-store. We've had retail shops in the past but also sold online. We would pay the internet tax on online orders but that's punishing people who couldn't visit our shop, why? This does nothing to 'level the playing field', it just batters internet retailers because they can't get their kicks out of smashing high street shops to pieces with ludicrous taxes and restrictions/business rates/mini taxes like paying for listening to a radio with several different licensing companies.

The DST (digital services tax) came in last year. The government said it would help to 'level the playing field'. Well, great, Google now charge us an extra 2% on our PPC costs. Has it impacted Google? Nope. Has it impacted independent retailers? Yep.

For anyone saying '2%' isn't much, that's not the point. If you're spending £12k per year with Google, you're now paying a penalty of £240 for daring to advertise online. It's a punishment handed down by government for advertising online.

As I've said before. Taxes are a really lazy way of dealing with issues like this. They just carpet bomb everyone with the same tax, without dealing with the actual reason that people don't use the high street - excessive parking charges, lack of parking spaces, lack of diversity, high entry costs, government restrictions on opening hours/employment/taxes/profits/licensing....town centres really are awful places. Drab, rainy, uninspiring, no design aesthetic, no drive or passion to create an experience...

 

[Mr D]

I still question this....for small start-ups, yeah, the costs are generally lower, kind of, but not really.

If you're a start-up, your possibly paying higher costs per unit on stock, materials, packaging, shipping.

For businesses that are established, the costs are higher in a different way to retail. We have a warehouse, we have huge packaging/distribution costs that nobody seems to ever take in to account.

I see a lot of people commenting on Twitter etc. Saying things like 'Yeah, tax Amazon, they never pay any taxes' <<< they don't seem to understand that Amazon is made up for independent sellers, who battle each other on pricing, delivery and customer service to try and get customers. The battle is on a national or international scale, whereas your local tshirt shop is only competing locally.

There's also a question mark over businesses that sell online and in-store. We've had retail shops in the past but also sold online. We would pay the internet tax on online orders but that's punishing people who couldn't visit our shop, why? This does nothing to 'level the playing field', it just batters internet retailers because they can't get their kicks out of smashing high street shops to pieces with ludicrous taxes and restrictions/business rates/mini taxes like paying for listening to a radio with several different licensing companies.

The DST (digital services tax) came in last year. The government said it would help to 'level the playing field'. Well, great, Google now charge us an extra 2% on our PPC costs. Has it impacted Google? Nope. Has it impacted independent retailers? Yep.

For anyone saying '2%' isn't much, that's not the point. If you're spending £12k per year with Google, you're now paying a penalty of £240 for daring to advertise online. It's a punishment handed down by government for advertising online.

As I've said before. Taxes are a really lazy way of dealing with issues like this. They just carpet bomb everyone with the same tax, without dealing with the actual reason that people don't use the high street - excessive parking charges, lack of parking spaces, lack of diversity, high entry costs, government restrictions on opening hours/employment/taxes/profits/licensing....town centres really are awful places. Drab, rainy, uninspiring, no design aesthetic, no drive or passion to create an experience...

Indeed, levelling the playing field is usually not taken into account.
Punishment sure, raising money from the public sure, keeping staff wages down maybe.

Google - like most other companies - gets an increase in cost they will pass it to the customers.
Joe public doesn't buy from google, joe retailer does - so joe retailer gets to pay extra.
Joe retailer can pass the increased costs on to customers himself or subsidize his customers by keeping his costs the same and reducing profits thereby.

The worst hit businesses will often be the ones unable to change pricing. The ones who chase the customers who always buy cheapest - so those businesses will have to wait until everyone else raises their prices before being able to raise their own prices. And only able to raise prices to a level below competitors.

A 2% turnover tax, applied across the board, could mean a retailer gets hit by increased costs in all goods and services (as tax applied to suppliers who pass it on) while at the same time getting hit with 2% tax themselves. Knock on effect could be a bigger increase than 2% in their pricing.
Inflation increase here we come!

Oh and say £20k business rates for a small town centre shop - versus zero business rates for small online shop.
Regardless of anything else the one shop has a bill the other does not have. No difference in costs to buy, same bulk purchases of same stock even. But one has to take account of different cost in the pricing.

 

[mattk]

Then raise VAT and be done with it.

Most ecommerce companies aren't the ones who benefitted from rates relief. Why do we have to be the ones to bail the bricks and mortars out?

It is being done on the pretence of "helping the High Street" - completely ignoring the fact that most people don't care about the High Street, otherwise it wouldn't be dying off in the first place.

 

[Darren_Ssc]

It is being done on the pretence of "helping the High Street" - completely ignoring the fact that most people don't care about the High Street, otherwise it wouldn't be dying off in the first place.

Anectodatally, people seem to think the reason High Street shops are failing is because online retailers have an unfair advantage. A myth perpetuated daily via the media.

The govt are simply looking for ways to raise the tax take in a manner that will upset the least number of voters and any logical argument will be disregarded.

 

[Paul Norman]

Online sale tax is the perfect tax for the Tory government.

It will not hit Amazon, or Ebay, or Asos, or, particularly, any of the big companies or wealthy individuals. It will hit squarely on the customers, to whom it will be passed in its entirety.

So the government gets to boast it has taxed big business, whilst continuing to tax you.

Unless you can wean yourself off your Amazon addiction!

 

[Paul Norman]

Because...and this matters - please tell me you didn't think this was to be a tax on Amazon?

 

[Guy Incognito]

We're an online business. We pay business rates on our warehouse (and don't qualify for relief on that).

Any thing like this will just see us increase our prices by the tax, and the cost of implementing it.

The reason the High Street is failing is due to the government and local councils trying to squeeze money out of people by charging / restricting parking - which makes people more likely to go to retail parks, making it much more difficult for people to drive anywhere due to stupid traffic restrictions, and with nonsensical business rates.

 

[japancool]

If it was to be a tax on Amazon/eBay then great! Aim the tax at them, not at the little guys!

I mean - unfair advantage? We don't have physical stores, we just pay for what we use - that's how it works, isn't it? Not our fault people want to shop online rather than haul themselves to a shop when there's wind, ice and Covid, on unreliable buses with rude drivers, when everything shuts at 5pm. And with British standards of service, shopping isn't a pleasant experience.

 

[japancool]

And of course, overseas sellers selling direct into the UK won't have to pay the tax.

 

[Mr D]

If it was to be a tax on Amazon/eBay then great! Aim the tax at them, not at the little guys!

I mean - unfair advantage? We don't have physical stores, we just pay for what we use - that's how it works, isn't it? Not our fault people want to shop online rather than haul themselves to a shop when there's wind, ice and Covid, on unreliable buses with rude drivers, when everything shuts at 5pm. And with British standards of service, shopping isn't a pleasant experience.

That's the point though.
Aim it at the big guys. Its passed on to the smaller guys. Who pass it on to the customers.
No reason any company should absorb the tax themselves.

 

[Mr D]

And of course, overseas sellers selling direct into the UK won't have to pay the tax.

They just have to register for VAT and submit VAT returns to HMRC. Some overseas stores have stopped shipping to the UK due to the work required.

 

[japancool]

Aim it at the big guys. Its passed on to the smaller guys. Who pass it on to the customers.

Not if we're not selling on marketplaces.

 

[Mr D]

We're an online business. We pay business rates on our warehouse (and don't qualify for relief on that).

Any thing like this will just see us increase our prices by the tax, and the cost of implementing it.

The reason the High Street is failing is due to the government and local councils trying to squeeze money out of people by charging / restricting parking - which makes people more likely to go to retail parks, making it much more difficult for people to drive anywhere due to stupid traffic restrictions, and with nonsensical business rates.

Even retail parks these days can have problems.
One I sometimes use has 8 units empty, some for more than 2 years. And 5 units filled. I only use it for one shop, don't even bother with the others.

 

[Mr D]

Not if we're not selling on marketplaces.

Aim it at marketplaces - and so long as none of your suppliers sell on the marketplace you are home clear.
And so long as none of your suppliers buy from the company.

Amazon have their fingers in a lot of pies beyond amazon website.

 

[UKSBD]

Unless you can wean yourself off your Amazon addiction!

Unless someone provides a good a service as Amazon there is little chance of that.

 

[Paul Norman]

Unless someone provides a good a service as Amazon there is little chance of that.

I have yet to need their services.

 

[Mr D]

I have yet to need their services.

Do those who supply you with goods and services feel the same way?

 

[Paul Norman]

Do those who supply you with goods and services feel the same way?

They may do, or may not.

And I am relaxed either way. However, at the moment, I am able to secure everything I need without using Amazon.

Much as I admire their business, and understand why they are so successful, I am able to buy the things I need without using them.

 

[UKSBD]

I have yet to need their services.

That sounds like the sort of thing one of the lads I used to work with would say.

There may have been a brilliant programme or film on the telly he really wanted to watch but it would be "I'm not watching that it's on xxxxx channel"

It was always fun everyone talking about it the next day as he pretended he didn't care "cus I got my principals"

 

[Paul Norman]

That sounds like the sort of thing one of the lads I used to work with would say.

There may have been a brilliant programme or film on the telly he really wanted to watch but it would be "I'm not watching that it's on xxxxx channel"

It was always fun everyone talking about it the next day as he pretended he didn't care "cus I got my principals"

Accept it is not a principle. It is just how things have happened. I have no objection to Amazon. I am not specifically boycotting them.

I am just able to source everything I need without using them. Should that change, I would take a look!

 

[japancool]

I use Amazon for little things. Last thing I bought off them was a set of wooden spoons. Don't have Prime, don't want it.

I buy more from eBay though.

 

[Mr D]

They may do, or may not.

And I am relaxed either way. However, at the moment, I am able to secure everything I need without using Amazon.

Much as I admire their business, and understand why they are so successful, I am able to buy the things I need without using them.

Your suppliers may well pass on to you the additional costs that they end up with.
Depending on how much they spend that way will determine what they have to put up for their customers.

 

[Paul Norman]

Your suppliers may well pass on to you the additional costs that they end up with.
Depending on how much they spend that way will determine what they have to put up for their customers.

I have literally no idea what point you are trying to make here.

I am happy with my suppliers, and I am content with the prices we pay.

Of course, like most modest sized businesses, I have very few suppliers!

 

[thetiger2015]

Accept it is not a principle. It is just how things have happened. I have no objection to Amazon. I am not specifically boycotting them.

I am just able to source everything I need without using them. Should that change, I would take a look!

Here's a question for you though.....are you boycotting Amazon or are you boycotting independent sellers that sell via Amazon?

It's a tricky one. I buy from Amazon, the marketplace, but I buy from independent UK businesses. It allows me to put everything in one basket and with a combined checkout from multiple retailers. Some of them don't have great websites or apps etc, because they get all the traffic and sales from marketplaces like Amazon and eBay. Some also used FBA, which means I get my item super quick but I've still purchased from an independent seller.

The point that a lot of people miss with Amazon, is that if you boycott them, you also boycott lots of little sellers who piggy back off their huge traffic volume.

Yeah, I do also order from independent websites, specialists but if they're not in the top 3 pages of Google search results, I just don't see them. Which means they're likely to be selling via Amazon/eBay etc.

 

[Mr D]

I have literally no idea what point you are trying to make here.

I am happy with my suppliers, and I am content with the prices we pay.

Of course, like most modest sized businesses, I have very few suppliers!

A tax on amazon can be passed on to you despite you not using amazon yourself.
Your supply chain doesn't use amazon at all, you are fine. Part of it uses amazon and the tax can be passed on.

 

[japancool]

Amazon has wholesale?

 

[Mr D]

Amazon has wholesale?

Amazon sellers have wholesale on amazon. No idea what wholesale companies amazon owns these days besides Whole Foods Market Inc.

Can buy plenty of business stuff on amazon, like can on ebay. Even 30 day terms available.

Plus of course amazon web services etc.

 

[gpietersz]

excessive parking charges, lack of parking spaces, lack of diversity, high entry costs, government restrictions on opening hours/employment/taxes/profits/licensing....town centres really are awful places. Drab, rainy, uninspiring, no design aesthetic, no drive or passion to create an experience

You also need to get all the important of these right.

Town centre where I live is lovely, well run, lots of shops and decent facilities - but they have reduced parking spaces and public transport is fairly limited and expensive.

 

[Mr D]

You also need to get all the important of these right.

Town centre where I live is lovely, well run, lots of shops and decent facilities - but they have reduced parking spaces and public transport is fairly limited and expensive.

I know what you mean.


Probably 99% of what we buy is at supermarket, retail park, village store or online. Even most of the offline stuff is available to buy online.

Every year or two I'll take the wife on a shopping expedition to a nearby city by bus, leaving the car near the bus stop.

 

[Paul Norman]

A tax on amazon can be passed on to you despite you not using amazon yourself.
Your supply chain doesn't use amazon at all, you are fine. Part of it uses amazon and the tax can be passed on.

Ah. I see. Yes, of course, I assume that if there is an online tax, I will be paying it whichever online store I may use.

 

[Paul Norman]

Here's a question for you though.....are you boycotting Amazon or are you boycotting independent sellers that sell via Amazon?

I Amazon/eBay etc.

I literally said, I am not boycotting them. I just have had no need to use them as yet.

 

[DontAsk]

I see a lot of people commenting on Twitter etc. Saying things like 'Yeah, tax Amazon, they never pay any taxes' <<< they don't seem to understand that Amazon is made up for independent sellers, who battle each other on pricing, delivery and customer service to try and get customers. The battle is on a national or international scale, whereas your local tshirt shop is only competing locally.

So tax these independents. If the ones selling the utter crap (not to mention unsafe electrical goods) go out of business then that can only be a good thing.

The reason the High Street is failing is due to the government and local councils trying to squeeze money out of people by charging / restricting parking - which makes people more likely to go to retail parks, making it much more difficult for people to drive anywhere due to stupid traffic restrictions, and with nonsensical business rates.

This ^^^ Thinking of Thame, Oxon that has lots of free parking up to 3 hours and also has lots of independent high street shops (or had, before covid). I know correlation is not causation, but...

 

[Mr D]

So tax these independents. If the ones selling the utter crap (not to mention unsafe electrical goods) go out of business then that can only be a good thing.



This ^^^ Thinking of Thame, Oxon that has lots of free parking up to 3 hours and also has lots of independent high street shops (or had, before covid). I know correlation is not causation, but...

If they are not going under from crap or unsafe goods being sold with current taxation then unlikely to go under from new taxation.
Unless they cannot alter their pricing.

There was a place - Aberystwyth? That had free parking for a short while due to circumstances. Apparently pretty bad - turned a lot of people away from shopping or even delivery because they could not park.

Free parking works when you can get a space. When you cannot find one because people park in them all day then no reason to shop there.

 

[socialsoul]

If it was to be a tax on Amazon/eBay then great! Aim the tax at them, not at the little guys!

I mean - unfair advantage? We don't have physical stores, we just pay for what we use - that's how it works, isn't it? Not our fault people want to shop online rather than haul themselves to a shop when there's wind, ice and Covid, on unreliable buses with rude drivers, when everything shuts at 5pm. And with British standards of service, shopping isn't a pleasant experience.

I agree! Many people, myself included, prefer to shop online for the reasons listed above. Hauling oneself to a shop isn't a pleasant experience, so many choose to shop online.