Chancellor of the Exchequer Rachel Reeves is weighing plans to increase taxes paid by online giants such as Amazon, in a bid to support Britain's struggling high street shops.

The proposed changes to the business rates system, set to be unveiled in the budget on 30 October, aim to reduce bills for physical stores while increasing taxes for e-commerce companies.

According to sources familiar with the matter cited by The Telegraph, Reeves is examining ways to reform the existing system, which calculates tax bills based on the value of a firm's physical premises. This system has been criticised for disproportionately affecting high street retailers with higher property values, compared to online companies with out-of-town warehouses.

"The current business rates system disincentivizes investment, creates uncertainty and places an undue burden on our high streets," Labour stated in its manifesto. The party pledged to replace the system, ensuring the same revenue is raised but in a fairer manner.

Reeves' plans are part of a broader effort to overhaul the government's finances and raise up to £40 billion to fund Labour's priorities. The proposals are likely to be put to consultation, paving the way for broader reform next year.

Amazon reported £33.6 billion in UK revenue last year, accounting for 5.8 per cent of its global total. The company claims to be one of the UK's top 10 largest taxpayers, paying £932 million in direct taxes in 2023.

Industry leaders, including JD Wetherspoon's chief executive officer John Hutson, have urged Reeves to take action, warning that failing to reform business rates will lead to bills quadrupling for high street businesses.

However, the British Retail Consortium cautioned against shifting taxes from one part of retail to another, suggesting the Treasury should look elsewhere to address challenges.

Reeves' proposals will be closely watched, particularly amid concerns that targeting online giants could impact Britain's attractiveness to investors. Amazon recently announced an £8 billion investment in the UK over the next five years.

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