Cost of online shopping and deliveries could rise due to new sales tax being considered by Rishi Sunak

SHOPPERS could see the cost of online shopping and home deliveries rise due to a new sales tax being considered by Rishi Sunak.

The chancellor has revealed the Treasury is looking into an "online sales tax" in a bid to boost government coffers and aid the struggling high street.

It would run alongside the existing business rates tax system introduced in 1990 where retailers pay taxes based on the so-called "rateable value" – essentially the rental value – of their property.

The problem with the current system is that it favours online retailers that don't have to pay pricey rents.

But in a call for evidence published this week, the Treasury said an increase in online shopping due to covid-19 could mean taxing online sales provides a "sustainable and meaningful revenue source".

It adds that it could rebalance the system and provide a boost to struggling high streets, and continues that the introduction of a new tax would be long-term rather than a short-term stop-gap.

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The Times reports that the tax would be around the 2 per cent mark and that it could raise £2billion a year for the Treasury.

The newspaper continues that the government is also considering a mandatory charge on online deliveries. 

HM Treasury declined to comment.

But there are fears these changes would mean higher prices and increased costs for online shoppers.

The Treasury Select Committee recommended the introduction of an online sales tax in a report back in October last year.

At the time, it said a shake-up of the "broken" system was needed to prevent the decline of the high street.

In the same call for evidence, the government is also considering axing business rates in favour of a tax on the value of a property based on when it was purchased or on subsequent valuations.

This could be paid by the property owner, rather than by the retailer or business, which is likely just renting the building.

Consumers and businesses now have until October 31 to respond to the Treasury, which is expected to set-out its initial findings this autumn before revealing its final decision in spring 2021.

This comes ahead of the next business rates revaluation in 2023, which was postponed from 2021 due to the coronavirus crisis.

Earlier this month, Mr Sunak also ordered a review of capital gains tax with a view to plugging the £3billion gap left in the UK's finances as a result of coronavirus.

It comes after the chancellor introduced a six-month stamp duty holiday in his mini-Budget this July.

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