Haldane urges higher tax on online sales to help high streets

Andy Haldane, president of the British Chambers of Commerce and a former chief economist of the Bank of England, has urged Prime Minister Andy Burnham to tax internet sales at a higher rate than sales made in physical shops, in order to level the playing field for high streets. Haldane is also described as one of Burnham's most senior former advisers.

Alongside the higher online rate, Haldane called for the tax system to be realigned so that it no longer favours online sellers. He also proposed a review of business rates and measures to boost devolution, the handing of more decision-making powers to local and regional bodies.

Business rates are a tax on business premises such as shops, based on their property values. Retailers Morrisons, Waterstones and Tesco have long called for an online sales tax to pay for lower high street business rates. The Institute for Public Policy Research, a think tank, has urged the Chancellor, John Healey, to introduce a 2 per cent tax on online purchases, according to the Independent. The Treasury has taken an interest in an IPPR report calling for an online sales tax to fund lower high street business rates.

The British Chambers of Commerce says reform of business rates and a fair way of taxing online sales are two key ways of easing the financial burden on businesses. In January 2025, the organisation reported that 63 per cent of businesses saw tax, including national insurance, as a concern after that year's Budget, the highest level since 2017.

Healey's budget is tipped to include a crackdown on online marketplaces such as Amazon and eBay. One measure under discussion could raise up to an extra £1bn by requiring marketplaces to collect VAT, a sales tax, on behalf of large-scale sellers based in the UK as well as overseas, the Guardian reported.

Burnham has taken several positions on the business side of the coming budget. In June he pledged to take more small businesses out of the business rates system by raising the rent valuation threshold. In August he said his government's budget would look at business rates. In April, taxes on warehouses used by online retailers were increased.

Burnham has also signalled caution on the public finances. He said it is crucial to have stability in public finances, and in September he described the upcoming budget as "challenging". Bloomberg reported that he had hinted he does not want his government to repeat the tax rises of recent Labour budgets.

Burnham and Healey are preparing their first budget, which is due on 28 October.