Iceland boss calls for digital sales tax as he defends not paying back Covid rates relief

The managing director of Iceland has said a digital sales tax should be introduced to help revive British high streets.

Richard Walker stated that the tax should come as part of a reform of the 'outdated and Victorian' business rates regime or, he warned, 'we will be killing off the high street as it is.'

He told the PA news agency that he supported the introduction of a digital sales tax despite Iceland having a 'really strong online business.'

Like other grocers, Iceland's online sales have boomed in the last year, with home deliveries growing by 300 per cent year-on-year by September 2020 and its capacity expanding to 750,000 orders each week.

Walker also continued to defend his company's decision not to repay business rates relief to the government despite experiencing a pandemic-induced sales boost and other supermarkets voluntary agreeing to return the tax rebate.

However, Iceland is not taking advantage of the government's extension to business rates relief, which was announced in February and would have granted them another 100 per cent discount until June 30.

Walker, whose father Malcolm founded the supermarket in Oswestry in 1970, said that the firm was right to take the relief at the time. 'We absolutely believe that we have come to the right decision,' he remarked.

"You look at some of the companies who paid it back, like Asda and Sainsbury's – they then announced thousands of job cuts after."

'Having that relief meant we could preserve jobs; that's what it was given to the sector to do. And actually, we've since been able to create jobs. So now, we felt that further support wasn't needed, so [we] won't take the extension.'

Tesco promised it would hand back £585million in December after it was criticised for paying over £300million in dividends, while Sainsbury's returned £400million, and Asda gave back £340million.

British supermarkets have promised to give back about £1.9billion in rates relief to the Exchequer since last year. But Iceland, along with Marks & Spencer, Waitrose and Co-op have has steadfastly refused to return any payments.

The Deeside-based firm's revenues grew 22 per cent to £1.7billion while operating profits climbed to £13.4million from a £21million loss the previous year, yet it is holding onto £40million of rates relief.

It announced in January that it was hiring 3,500 more new jobs comprising delivery drivers, store assistants and online pickers, on top of the 3,000 permanent staff it employed last year.

Mr Walker, who released his first book The Green Grocer on April 2, said there is still caution in the retail sector over making major commitments due to fear of failure.

He said: 'Big commitments have to start somewhere so I think all green commitments are positive steps but I think there can be a fear of failure. But I think that's why companies need to set out clear plans and the Government has to as well.

'Collaboration is also vital. The UK supermarket sector is one of the most competitive environments you can imagine, but we have to share knowledge to make progress with sustainability.'

The UK government is currently due to publish its review on business rates this Autumn. Though the tax raised over £30billion in 2018/19, industry leaders have often complained it benefits online companies at the expense of physical stores.

Source: This is Money