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Tesco boss demands new tax online retailers to save high street

PUBLISHED: 12:15 13 May 2019 | UPDATED: 12:21 13 May 2019

Shoppers in Ipswich town centre on Saturday afternoon. Picture:SUZANNE DAY

Shoppers in Ipswich town centre on Saturday afternoon. Picture:SUZANNE DAY

Suzanne Day

The head of Tesco has called for business rates to be cut and replaced with a new tax for online retailers in a bid to save the declining high street.

Tesco chief executive Dave Lewis, Photo: Joe Giddens / PA.Tesco chief executive Dave Lewis, Photo: Joe Giddens / PA.

Chief executive Dave Lewis has warned out of date taxation systems are placing extreme pressure on thousands of businesses - stifling innovation in the process.

MORE: 'Mounting debts' force family-run Ipswich garage to close down after nearly 30 years

In recent months Ipswich has lost a number of stores as businesses struggle under the strain of tough business rates.

Last week, Trespass outdoor clothing announced it would be closing its store in Westgate Street.

While jewellers Riley & Riley also revealed it would be closing its Buttermarket store after 15 years.

Business rates were also cited as a contributing factor in Debenhams' financial woes earlier this year.

Debenhams is the largest store in Ipswich town centre. Picture: PAUL GEATERDebenhams is the largest store in Ipswich town centre. Picture: PAUL GEATER

Mr Lewis believes rates must be cut by a fifth - with the reduction paid for with a 2% targeted levy on web retailers' revenues.

"It doesn't matter whether you are a large retailer such as Tesco, or run an independent corner shop," he said, "business rates have a huge impact on every bricks-and-mortar retailer. This is unsustainable."

The Trespass store in Ipswich town centre has put up signs saying it is due to close. Picture: ARCHANTThe Trespass store in Ipswich town centre has put up signs saying it is due to close. Picture: ARCHANT

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Currently the amount a business pays is calculated with the value of its physical premises.

While online retailer can operate from out-of-town warehouse worth far less than property in town and city centre - meaning their rates are usually significantly lower than traditional firms.

"Our business rates system has barely evolved since 1988, yet the way people shop has changed profoundly," Mr Lewis said.

"Online retail has grown dramatically, while sales in shops have fallen. Healthy competition between shops and online is good for customers, and drives innovation.

"But the ability to compete is undermined when the playing field between shops and online is not level."

Mark Riley, of Riley & Riley feels the Tesco boss' idea could be a way forward.

"I do like the idea trying to level the playing field", he said, "if everyone contributes everyone will probably pay less.

"The prospect of internet businesses paying a bigger share is very appealing to me but there is a case for that.

"Because the market has changed and retail has changed the council needs to look at changing. It makes logical sense."

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