Home » Tech companies such as Amazon will pay higher business rates, Labour to pledge

Tech companies such as Amazon will pay higher business rates, Labour to pledge

Labour will reveal plans to increase taxes on large technology companies in its election manifesto, i understands.

The party has scrapped plans for a new levy on digital services which would have forced US-based firms to pay more tax in Britain.

But the manifesto will include a policy of shifting the burden of business rates away from high street shops and towards companies such as Amazon, which have a relatively smaller physical presence in the UK.

This week a deadline for shadow ministers to submit policy ideas to be contained in the election manifesto passed, with a draft of the final document likely to be drawn up in the coming weeks.

The definitive version of the manifesto will not be published until the formal start of the election campaign, following a consultation with trade unions and other groups within Labour.

But shadow Chancellor Rachel Reeves is understood to be adamant that an overhaul of the current system of business rates will be included.

The party has commissioned a report into the best way to reform the rates regime, which will feed in to the manifesto. A source said the key question was: “In a new gig economy, how do you make it fairer for shops, for the high street?”

Currentlyt, business rates are based primarily on the value of the premises occupied by companies, meaning that shops in town and city centres can face much higher bills than out-of-town warehouses used to distribute goods ordered online.

Helen Miller, of the Institute for Fiscal Studies, warned that reform could be complex, telling i: “There has been some talk about reforming business rates in a way that moved the burden towards companies that sell online … But there are no easy or obvious answers.”

Last year Reeves abandoned a previous policy of a digital services tax, following warnings that it would spark trade tensions with the US because American companies such as Alphabet and Meta would be disproportionately affected.

But she is still committed to working with allies to strengthen the global system of taxation so that firms cannot shift the bulk of their profits to tax havens.

The party’s national policy forum, which produced a document on which the election manifesto should be based, concluded last summer: “Labour wants to shift the burden of business tax away from high streets, SMEs and investment towards online tech giants and multinationals. Labour will make sure that multinational tech companies pay their fair share of tax.”

It added: “The next Labour government will scrap and replace the current system of business rates in England and Wales with a fully costed and funded system of business property taxation that is fit for the 21st century, levelling the playing field so that our high streets can thrive.”