Tesco offers to pay 'Gafa tax' if business rates are lowered

Tesco, the biggest British supermarket chain, has called for the reform of ‘business rates’ (a commercial real estate tax) and suggested the introduction of an online tax – which it would have to pay itself as well.

Exit real estate tax?

The chain wants business rates reduced by 20 % as it would give e-commerce companies an “unfair advantage”. The tax applies to all commercial real estate in the United Kingdom, including stores and bars but also offices and warehouses. The rates depend on rents, meaning that retailers (who pay high amounts to be present in the important city centres) have to pay a lot more than e-tailers who mainly occupy distribution centres in more rural locations.

To compensate for the loss of revenue for the government, CEO Dave Lewis suggests a tax of 2 % on all online sales. Supermarket chain Co-op has already expressed its support for the scheme, that has already been considered (without much effect) by the May cabinet. France, by contrast, has already introduced a similar law.

Tesco’s city centre stores are suffering: last week, the chain announced it would cut 4,500 jobs in its urban Metro stores. Those job cuts are added to an earlier cost-cutting round that severed 9,000 employees. In both cases, Tesco had named the business rates as one of the reasons for the need to cut costs and jobs.