Could this tax be introduced in the next parliament to help cut the deficit?
PRLog - Jun 28, 2013 - HORLEY, U.K. -- Online transaction tax
With the spending revue completed and the cuts to government department announced, it is become more evident that the next government may have to raise taxes in order to reduce the deficit and try and get the country’s finances back on track.
Speculation about which taxes could be raised is rife, with commentators and lobbying groups making their case even though there is still two years until the general election.
One of the many rumours circulating at the moment is a transaction tax on card holder not present payments. This new tax, if introduced could radically change not only the deficit but the way companies and shoppers do business.
While trying to stay impartial, I have listed some of the pros and cons the introduction of this tax would have on the economy.
Possible disadvantages
The increase of online prices would distraught the market and harm competition. This would surely lead to an overall increase in prices. The resulting inflation would harm the economy and possibly lead to interest rates going up, risking the already fragile housing market.
This would severely slow the growth of online sales putting at risk the one part of the UK economy that is actually growing. This would jeopardise existing as well as thousands of potential new jobs in online retailing.
This effect of this would not be limited to just online retailers. There is a whole e-commerce industry supporting these online retails with services such as web design and search engine optimisation. Other off line businesses such as parcel delivery couriers and the Post office would also see a decline in business.
Possible benefits
The tax if set at 5% could raise as much as £5 billion for the treasury each year. This amount would be significantly larger if the scope of the new tax was extended to cover direct debit payments as well as cardholder not present transactions.
If the tax was applied to UK registered cards and bank accounts rather than to UK transactions it would affect online retailers based abroad were tax rates are cheaper at the same level as those based and already paying tax in the UK.
By increasing the selling prices of online retailers it could reduce the price difference between online and high street business possibly leading to the regeneration of many of the countries town centres.
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Online transaction tax speculation
June 28, 2013 at 08:33 AM EDT
