British retailer Marks and Spencer (MKS.L) has warned chancellor Rishi Sunak that an online sales tax would do more harm than good for shops and Britain's high street.
It comes after the government launched a consultation into possibilities for an online sales tax in February in a bid to ease the tax burden on the high street.
Proceeds will go towards funding a reduction in business rates for stores, the Treasury said. The consultation is due to close on Friday 20 May.
Business rates are paid on all commercial properties and are calculated based on the property value and the rent paid.
However, the chain believers that a new online tax would "punish" the very retailers it plans to support and leave them with less money to invest in high street shops.
The chain confirmed to Yahoo Finance UK that Eoin Tonge, chief financial office at M&S, wrote a letter to Sunak following original reports from the BBC.
Tonge said in the letter: "Introducing an additional tax on retail, already overburdened, will simply mean retailers cut their cloth accordingly.
"This rationalisation will always start with the least profitable parts of a business, which, in the case of multi-channel retailers, will more often than not be high street stores.
He added that the move would not benefit high street stores, but instead cause them "damage".
"Therefore it is likely that, far from helping the high street an online sales tax will damage shops and our high streets further, particularly in areas that require new investment to bring them back to life."
The Treasury has reportedly not yet decided whether it plans to introduce the tax.
The chancellor had promised the consultation at the Budget in October last year after businesses’ raised concerns of a potential tax imbalance between in-store retailers and those online.
According to a survey from property specialist Colliers, 89% of retailers back calls for an online sales tax.
A separate report from the British Retail Consortium has highlighted that 83% of retailers said it is "likely", "very likely" or "certain" that they will close shops if the business rates burden is not reduced.
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