Andy Burnham’s plans for a so-called ‘warehouse tax’ were dropped over fears a raid on US firms like Amazon could spark a trade war with Donald Trump, a top industry body has claimed.
The Prime Minister, during his campaign to become Makerfield MP, pledged to hike business rates on “out of town” warehouses to fund cuts for high street shops, but the Chancellor has since ruled out the plans.
The boss of a top hospitality industry body has now claimed ministers backed down on the plans over fears it could trigger the ire of US President Donald Trump.
Allen Simpson, chief executive of UKHospitality, told City AM: “We have been told the problem is that the big online giants are American, and the White House will look very badly on any tax rise, which hits, say, Amazon.
“That’s not contested. That’s just what the officials say. The problem is: we can’t fix business rates without taxing the big American online giants, and we don’t want to do that because it will start a trade war with Trump.”
The hospitality industry has been attempting to convince the government that high street businesses like pubs pay an unfair share of business rates, compared to online giants like Amazon and Ebay.
Though business rates are currently based on the value of a company’s property, Simpson claims the system should be reformed to, for example, determine a firm’s bill as a percentage of its revenue.
“The problem is that if you make it a percentage of revenue, so [that] an Amazon warehouse is paying as much as a hotel, you have to dramatically increase the business rates on Amazon warehouses,” he said.
Retail bosses against warehouse tax
Simpson said he had been told by officials in Keir Starmer’s governments that they were avoiding a warehouse tax to dodge a trade war with Trump, adding that he believes Healey’s decision to rule out the tax was based on the same calculation.
A Treasury spokesperson said: “As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, and we do not routinely comment on rumour, speculation or proposals.”
The US President has threatened a trade war in response to UK tax hikes in the past, when he vowed to impose 100 per cent tariffs in response to a digital services tax on American tech firms.
A potential warehouse tax had been staunchly opposed by retail bosses. They claimed that the measure would push up tax on sites used by retailers for storage and distribution, inevitably forcing price rises for shoppers.
Jason Tarry, the chair of John Lewis and Waitrose, had said the tax raid would “reveal a fundamental misunderstanding of how modern high streets work”.
The government says it is taking other measures to support hospitality firms. In July, Burnham announced a 20 per cent business rates cut for pubs.
Speaking at a UKHospitality event on Tuesday, business minister Kate Dearden told sector bosses the government will help deliver “more investment, more jobs, more opportunities, and stronger high streets, and the sustainable growth that reaches every single part of this country”.