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UK retail needs Internet tax 'shock', says billionaire boss

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"You have to tax the Internet for the good of the high street, the good of the all," says Sports Direct's Mike Ashley.

London

THE British government should levy a tax on retailers with online sales accounting for more than 20 per cent of revenue to save traditional shopping districts, the billionaire boss of Sports Direct told lawmakers on Monday.

Mike Ashley said the move would be "a massive electric shock" for the sector, encouraging retailers to invest in physical stores.

"You have to tax the Internet for the good of the high street, the good of the all," Mr Ashley told the lower house of Parliament's Housing, Communities and Local Government Committee.

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"If I'm a retailer ... I will make sure not to pay the tax, I keep 80 per cent of my revenues going through the high street," he said, noting that Sports Direct has a £400 million (S$695 million) Internet business.

He said that, if the new levy came in, it would make sense for Sports Direct and retailers in general to invest in and keep stores open. With annual revenue of about £3.36 billion, Sports Direct would currently not be liable for the tax Mr Ashley proposed.

Mr Ashley also called on local councils to offer retailers free business rates (property taxes) for five years if every pound of free rates was matched by retailer investment in the site.

The parliamentary committee is conducting an inquiry into the future of traditional retail districts after a torrid year for the sector.

A string of British store groups have gone out of business or announced shop closures this year as they battle subdued consumer spending, rising labour costs, higher property taxes, growing online competition and uncertainty over Brexit.

Toys R Us UK, Maplin and Poundworld have all gone bust, while combined store closures from Marks & Spencer, Debenhams, Mothercare and House of Fraser are in the hundreds.

A net 1,123 stores disappeared from Britain's top 500 high streets in the first half of 2018, research by PwC showed last month.

An estimated 40,000 people have been affected this year by the sector's upheaval, the BBC reported on Monday.

In August, Sports Direct snapped up the 59-store House of Fraser department store chain for £90 million after it collapsed into administration.

So far Mr Ashley has secured the future of about 23 stores. He has blamed the closure of others on landlords for not offering more favourable terms.

Mr Ashley told lawmakers that his target was to keep 80 per cent of House of Fraser's stores open.

"I'm not Father Christmas, I'm actually, I believe, a very fair guy," he told lawmakers.

In October, Sports Direct purchased specialist bicycle retailer Evans Cycles for an undisclosed sum immediately after its parent went into administration, but Mr Ashley said that only half of the chain's 62 stores would avoid closure.

Mr Ashley's parliamentary appearance was not his first. In 2016 he was summoned to explain Sports Direct's working practices and conceded it had effectively paid some warehouse staff below the statutory minimum wage. REUTERS