Leaders call for changes to digital tax and business rates
Digital taxes should expand to cover a wider range of online sales, according to a poll of over 1,000 business leaders by accountancy and advisory firm BDO LLP.
A significant majority (93 per cent) of respondents in the poll said that that while many online businesses have flourished, many traditional businesses have struggled during the health crisis, and the government should raise much-needed revenue by expanding tax on online sales.
Expanding digital taxes is not the only area that respondents would like the government to introduce changes, ahead of Chancellor Rishi Sunak 's Budget announcement taking place today.
When asked how the Chancellor should change Business Rates for 2021 considering the difficulties that hospitality, retail and other high-street businesses have faced, one in four (24 per cent) would opt to abolish Business Rates.
Instead, nearly one in three (31 per cent) would like Business Rates to be based on rents actually charged or for property owners to be charged a percentage of profits.
Opinions were divided among business leaders as to how the Chancellor should deal with the issue of intergenerational wealth and opportunity which has come into sharper focus as younger generations have borne more of the economic burden of the pandemic.
A little under half of respondents (45 per cent) would like a well-funded skilled-based programme to be established in order to train individuals whose jobs no longer exist. Whereas, one in three (33 per cent) would rather the government prioritised simplifying Inheritance Tax to help the older generations pass on their wealth.
Commenting on the survey 's findings, Paul Townson (pictured), tax partner at BDO in the Midlands, said: “Business leaders are looking for the government to introduce progressive steps to help individuals and businesses flourish. This survey shows that most business leaders accept that higher taxes on companies will be a key component to the post-Covid-19 recovery and would like the Chancellor to overhaul Business Rates, digital taxes and green taxes.
“The major stumbling block for taxing online sales will centre on how to get digital companies to bear the burden of the increased tax rather than pass it on to consumers. A global consensus on digital taxes could be the ideal solution, and is espoused by many countries. This has not however, stopped many of the same countries, including the UK from adopting their own version of the tax. However, the new US administration may provide a better opportunity to recommence international discussions.
“Where digital companies have thrived, the high-street has unfortunately suffered, leading to renewed calls for Business Rates to be overhauled. Although the temporary exemptions introduced by the Chancellor have been helpful to some businesses, Mr Sunak should certainly consider long term solutions to how this tax levy operates to reinvigorate our towns and cities, especially in light of last week 's roadmap. ”