The Office for National Statistics (ONS) has released the latest retail sales figures which shows that sales volumes (excluding motor fuel) decreased by 3.8% compared to December 2020 and 3.2% compared to February 2020.
This is a result of the continued lockdowns across the UK and disappointing January sales volumes will hit retailers hard after a poor run into Christmas where retail volumes were down 3.7% in the three months to January. As a first step, the government should extend the rates holiday for at least another year for those sectors that have suffered more than most as a result of the pandemic while it looks at local government funding.
The statistics confirm the move to online retailing where online retail reached a record proportion of total retail in January 2021 at 35.2%. What is evident is that small and independent retailers need to accelerate their digital strategy if they want to hope to survive. The Government should use the budget to provide grants and training for small businesses to broaden their move online.
The move online will mean that some form of digital sales tax will be increasingly be borne not just by the likes of Amazon and therefore will become an attractive revenue raising measure for the Treasury. Any such move must be coordinated internationally to ensure it has the desired effect. A move to tax revenue doesn’t feed into the ability of companies to be able to pay. A move to tax profits from those sales is a fairer method of raising taxation.