Reeves considering tax hike on Amazon, online retailers - reports

Chancellor of the Exchequer Rachel Reeves is considering a tax increase on large e-commerce companies like Amazon in her upcoming budget, according to reports on Tuesday, in a bid to support the UK’s ailing high street.

The plan, reported by Bloomberg, would involve reforms to the current business rates system, which has been widely criticised for favouring online retailers with warehouses in lower-cost areas.

A potential adjustment would align with Labour's pledge to level the playing field between traditional retail outlets and online businesses.

The proposed tax changes could help reduce the financial burden on physical stores, particularly in sectors such as hospitality and leisure, where firms were facing a looming increase in business rates when a Covid-era relief measure expires in April.

Despite calls from over 170 business leaders urging Reeves to extend the relief, she was reportedly focussed on alternative measures to ease the impact, rather than continuing the current discount.

Labour’s broader strategy includes long-term reforms to business tax that could bring in up to £40bn for public services, while addressing the perceived imbalance between high street stores and e-commerce giants.

While an online sales tax had been discussed in the past, it was unlikely to be part of this package, Bloomberg said.

Instead, Reeves was reportedly considering adjustments to how business rates are calculated, potentially basing them on factors such as a company’s revenue or the type of property occupied, which could offer relief to struggling firms.

Reeves is set to announce her maiden budget on 30 October.

Reporting by Josh White for Sharecast.com.