Covid: Government ‘considering excess profits tax’ on companies cashing in during pandemic

Amazon and other firms that have made considerable gains during the coronavirus lockdowns are facing an “excessive profits tax” under plans reportedly being considered by the government.

According to The Sunday Times, the No 10 policy unit is working on proposals for a one-off windfall tax that would impact major businesses that have seen above average profits during the pandemic amid a surge in online deliveries.

A similar proposal has previously been floated by the Resolution Foundation think-tank, which suggested a “pandemic profit levy” of 10 per cent on unexpected gains made by companies during the crisis while other companies have been unable to trade.

Leaked emails to the newspaper also suggest that Rishi Sunak has summoned tech firms and retailers to a meeting ahead in the coming weeks to discuss how a separate online sales tax could work in the UK.

The proposed measure — dubbed the “Amazon tax” — forms part of discussions over a review of business rates and whether the government should “shift the balance between online and physical shops”.

A call for evidence on the issue was announced last summer, acknowledging that many retailers are opposed to such a levy but noted that the existing business rates system favoured online firms over those with high-rental value shops.

However, the tax measures are unlikely to form part of the chancellor’s Budget next month during which Mr Sunak will set out the next iteration of government support for businesses forced to closed during the lockdown.

The latest forecasts from the Office for Budget Responsibility (OBR) will also be published in March detailing the economic fallout from the pandemic.

Bridget Phillipson, the shadow chief secretary to Treasury, said: “High streets have been closed for months but online retailers are booming. 

“We need to see action for a level playing field on tax between online and bricks and mortar shops, to keep our high streets alive, and we need a hospitality and high street fund to support struggling businesses and protect jobs in all our communities.”

A Treasury spokesperson said: “We want to see thriving high streets, which is why we’ve spent tens of billions of pounds supporting shops throughout the pandemic and are supporting town centres through the changes online shopping brings. 

“Our business rates review call for evidence included questions on whether we should shift the balance between online and physical shops by introducing an online sales tax. We’re considering responses now.”