How often is it now more expensive on-line - except for tax avoidance?

The latest BRC Cost of Collection Survey coming on top of the attacks of high street retailers on the way their on-line competitors avoid business rates as well as VAT and of recent personal experiences comparing on-line prices to those in local shops which also offer efficient maintenence and repair services, has called me to take a more critical look at some of the accepted wisdom regarding the competitiveness of the on-line world. The BRC survey indicates that while we are all making more use of credit and debit cards these are significantly more expensive for the retailer than when we pay by cash (despite the cost of handling). Also I blogged early in the New Year on the cost of delivery which can wipe out any savings to customers who live outside “free” delivery areas.

I consequently suspect that the growth of on-line sales would slow sharply were the European Union to get its act together and copy the new United States Stream Lined Sales Tax routines to create a level playing field betwen on-line and off-line retailers. It might stop altogether, or even reverse, were they to be subject to levies akin to the cost of business rates on physical premises

However, the definition of on-line and off-line is blurring. Our local book shop is excellent at finding what I want (on-line searches including sources for out of print works to which I do not have access). They also tell me it is delivered so that I can walk down and collect it without the risk that it will be stolen from my doorstep or that I will have to visit a parcel depot miles away. For white goods I routinely check prices and reviews before visiting shops in easy reach to which I can return expensive items or obtain service if they break down. Unfortunately I was recently caught out when one of these (established for over 50 years and apparently thriving) suddenly went out of business (rent review on top of business rates).

Given the pressures on finance ministers around the world to balance their books, or at least reduce the rate at which they are increasing their debts, it is only a matter of time before “net neutrality” will be “redefined” by them to include fiscal neutrality as well as legal neutrality and neutrality of access. If so, the effect on some economies within the EU, such as Ireland, Luxembourg and Malta, will be even more dramatic than those on the Cayman or Channel Islands. We can also expect to see several US stock market valuations collapse.

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