Burnham Urged to Tax Online Sales Higher to Save High Streets 2026

Andy Burnham has been urged to tax online sales at a higher rate than physical shops to help level the playing field for struggling high streets. The call came from Andy Haldane, one of Burnham's most senior former advisers and ex-chief economist at the Bank of England.

As the prime minister and chancellor John Healey prepare for their first budget next week, Haldane joined calls for action to stop the shutters coming down on growing numbers of shops across the UK.

Why High Streets Are Dying: The Tax Imbalance

In an interview for a Guardian series on reversing the declining fortunes of British towns, Haldane argued that the tax system is skewed against physical retailers. He pointed out that business rates are punitive for smaller shops, while online sellers often escape the same burden.

“The balance of tax incentives are strongly skewed towards the digital over the physical, and the large over small, and if you’re serious about high streets that needs somehow rebalancing,” Haldane said. He called for “some levelling of the playing field” to help smaller operators battling soaring costs and evaporating demand.

Haldane's Proposals: Tax Realignment and Business Rates Review

Haldane urged Burnham to follow through with Labour’s manifesto promise to “replace” the business rates system. He also recommended a review of business rates and measures to turbocharge devolution.

“This needs to be wrapped up with that more fundamental review of business rates,” he said. The proposals aim to shift the tax burden away from physical shops and towards online giants, which Haldane believes would help revitalise town centres.

• Tax online sales at a higher rate than physical shops to level the playing field.
• Replace the business rates system as promised in Labour’s manifesto.
• Review business rates to reduce the burden on smaller retailers.
• Turbocharge devolution to give local areas more control over taxation and spending.
• Address the imbalance between digital and physical, large and small businesses.

What This Means for Retailers and Consumers

If implemented, these changes could significantly alter the retail landscape. Physical shops might see lower business rates, while online sellers could face higher taxes. This could lead to price adjustments and potentially a shift in consumer behavior towards local shopping.

However, critics argue that taxing online sales could hurt consumers through higher prices and stifle e-commerce innovation. The debate underscores the tension between preserving traditional high streets and embracing digital economic growth.

Comparison of Tax Burdens: Physical vs Online Retail

The table illustrates the perceived imbalance: physical shops face multiple layers of taxation, while online sellers benefit from a lighter burden, especially larger ones. The background to this story is set out in Elections Bill Overhaul Urged by Former Minister Andy Burnham. A related thread runs through Barclays Profits Soar: Burnham Urged to Tax Banks More. Earlier coverage in Barclays Profits Soar 30%, Burnham Urged to Increase Bank Tax shows how the argument developed.

The Political Context: Burnham's Budget Challenge

With the budget looming, Burnham faces pressure to deliver on promises while balancing fiscal responsibility. Haldane's advice adds weight to calls for reform, but any tax changes will be scrutinized by both business groups and consumers. A closer look at the same subject appears in Burnham's £100m Business Rates Giveaway: What Pubs Think. Anyone following the wider picture can start with Burnham's £100m Business Rates Giveaway: What Pubs Say. The same theme surfaces in Business Rates Cut Excludes Cafes, Leaving Owners Frustrated, which takes a different angle.

The outcome could set a precedent for how the UK addresses the digital-physical divide in retail, with implications for other sectors facing similar disruptions. Context on how this played out before sits in Andy Burnham Cabinet: Healey Chancellor, Miliband Foreign.

FAQ

The debate over taxing online sales is part of a broader conversation about the future of town centres. As Burnham considers his budget, the pressure to act is mounting. For those tracking how political decisions shape the business landscape, the JP Morgan boss's warning to Burnham about the consequences of taxing banks offers a parallel perspective on the risks of fiscal reform. Meanwhile, the push to tax banks has already sparked debate about unintended economic effects.

Haldane's intervention highlights the need for a balanced approach that supports both innovation and tradition. As the budget approaches, all eyes will be on whether Burnham heeds this advice or charts a different course.