2% UK Digital Services Tax will not save High Street

2% UK Digital Services Tax will not save High Street. Only 27% of the UK do not think there should be any Digital Services Tax

Whistl, the leading delivery management company in the UK, has found that the 2% Digital Services Tax (DST) will not turn the tide from online shopping back to High Street.

The DST came into effect in September 2020 to tax multinational digital enterprises and make them pay more tax and create more equality with traditional retailers.  However, it proved controversial when Amazon announced it would pass on the tax to its selling partners, who would have to either absorb the tax or pass on to their customers.

Whistl’s UK wide research found that the DST, if passed on to customers, would have little impact on them returning to the High Street as it would only encourage a third of online shoppers to spend a little more on the High Street, but only a quarter of these would reduce their online spend.

• Interestingly, 38% of younger shoppers and those with children (36%) would be most motivated by the DST to go out to the High Street more
• The DST has had the least effect on older shoppers (78%)
• Those without children (73%) will not be returning to the High Street as a result.

Encouragingly for The Treasury, only 27% do not think there should be any Digital Services Tax at all, which drops to 15% among younger shoppers and up to 35% among those aged over 65.

Awareness of the tax is: 

• Highest among younger shoppers (44%) against an average of 33% across all age groups. 
• It is also higher with those with children (39%)
• And those who have moved their shopping permanently online (37%).

Strikingly, only 11% believe that the consumer should bear all the cost of the new tax with around 40% thinking that the tax should either be borne by the seller or shared between the seller and the consumer.

When asked about who should be responsible for educating the public on the new tax:

• 6% think it should be the responsibility of the seller to communicate the new tax
• This rises to 43% of the 18-24 age group
• 59% think the onus for communicating about the tax should be on both the seller and the Government.

Melanie Darvall, Director of Marketing and Communications, Whistl, said: "Calls to tax online retailers have been seen as a way to help restore the health of the High Street, and that is one of the reasons the 2% tax was introduced. Unfortunately, it appears that this tax will not help the High Street and any costs are passed to the seller or end customer.

These research findings demonstrate that issues arise outside the control of the online retailer and that they need access to experts who can help them navigate these issues. At Whistl that is why we have developed the full service from click to delivery providing expertise on every stage of the online sales, fulfilment and delivery process."