Online sales tax could be introduced to ‘regenerate’ Scotland’s high streets 

Scottish ministers are considering the introduction of an online sales tax to level the retail playing field and save the high street, according to a new action plan to regenerate town centres.

Measures to revitalise Scotland’s towns and rejuvenate local economies, published today, say a taxation of digital sales in Scotland will be explored, with the aim of ensuring online businesses contribute to tax revenues alongside bricks and mortar firms.

The joint report from the Scottish Government and COSLA – the umbrella body for Scotland’s 32 local councils – outlines actions to better embed a ‘town centre first’ approach to meet the needs of communities and tackle climate change.

It commits to looking at the UK Government’s consultation exploring the pros and cons of an online sales tax, which was published in February.

The consultation said that the pandemic highlighted how rapid technological advances are changing the way consumers shop, pointing out that the proportion of online retail sales rose sharply in the first half of 2020 and again during subsequent lockdowns.

It said there were concerns among retailers with physical premises that they face an unfair tax burden, because they are typically subject to a higher level of business rates than their online competitors.

In addition to the consideration of an online sales tax, the action plan for Scotland’s towns says it will be made a requirement for developers to install and optimise digital connectivity in new town centre housing developments.

It says it will build “digital towns” by taking action to close the digital divide through the provision of digital skills, devices and data via its Connecting Scotland programme, which aims to get up to 300,000 more households online by 2026.

The government will further boost the digital capability of towns by supporting community organisations delivering digital skills training to people in their local areas, including through the ‘investing in communities fund’.

It will also expand the rollout and development of towns based service solutions such as towns’ digital platforms and local gift cards, for example Scotland Loves Local.

In addition, the government has committed to incentivising entrepreneurship in towns by delivering the ambitions set out in the National Strategy for Economic Transformation.

Community wealth minister Tom Arthur said: “This response has been developed in partnership with local government and recognises how vital town centres are for Scotland’s economic, environmental and social wellbeing.

“The actions in this report provide a framework to meet our ambitions and give communities the freedom and confidence to deliver locally. They will help improve our town centres following the pandemic and deliver net zero climate ambitions whilst promoting better planning and delivering enhanced digital capabilities for businesses and residents.

“This approach will also help us deliver the entrepreneurship ambitions set out in the National Strategy for Economic Transformation by creating enterprising communities. We all have a role to play in ensuring our towns and town centres deliver the needs of the whole community and these actions will help us deliver that ambition by creating healthier, fairer, greener and more successful towns.”

Professor Leigh Sparks of the University of Stirling chaired the Town Centre Action Plan Review, alongside members from COSLA, the Royal Town Planning Institute, South of Scotland Enterprise, the Carnegie Trust, the Federation of Small Businesses, Public Health Scotland, Sustrans, Inclusion Scotland and the Scottish Government.