A sales tax to level the internet, retail playing field?

In the United States a piece of legislation is slowly winding through the approval process and if it becomes law would allow state governments to force Internet retailers to collect sales taxes from their customers and remit the proceeds to state and local government – the so-called Market Fairness Act. The states would be required to provide free software to be embedded in retail Web sites to work out taxes due. Could this be coming to the UK?

The impetus to introduce the legislation in the States is the realisation that many local businesses are suffering taxes that overseas internet businesses are not. As a result Americans are buying from internet businesses that can sell at lower prices and still make cash profit due to their lower tax hit.

This has parallels with the experiences of high street organisations in the UK who complain that Amazon and other large, international retailers, with tax paid in off-shore, low-tax jurisdictions, effectively have an unfair trading advantage over their UK resident competitors.

If George Osborne is looking for a way to gather more tax revenue from economic activity in the UK and please the voters at the same this must be a tempting route to follow. One would assume that retailers selling on the internet would have to apply to HMRC, for exemption from the Sales Tax, on the basis that their business was registered to pay tax on its business profits in the UK.


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