Sainsbury's chief calls for action to tax online rivals

Justin King says high street hit by unfair burden as supermarket's sales rise to give 16.8% market share

Sainsbury's chief executive Justin King has attacked the government for creating an unfair burden on high-street retailers by not doing more to tax online-only rivals such as Amazon.

He called for a level playing field and said politicians should take action or risk seeing the high street shrink further. King said: "The burden of taxation in the UK falls very heavily on bricks-and-mortar retailers versus internet only retailers.

"For every pound that we have saved [when corporation tax was cut] we have paid around £2.50 extra in other taxes, primarily business rates. If the tax burden falls ever more heavily only on those businesses that have real presence that is something that has to be addressed."

His comments came days before G8 leaders meet in Northern Ireland, with tax avoidance, particularly among retailers such as Amazon, topping the agenda.

Several retailers have called on the government to lower business rates, with the British Retail Consortium campaigning on the issue.

King added: "In the long run if our high streets shrink as a result of an unlevel playing field on tax, the government's tax take and most importantly local councils' tax take will reduce considerably."

He said he hoped the topic would form part of parties' manifestos and believes it should be higher up ministers' agendas.

"In the US you have seen a very significant change from the debate starting, to real action being taken by politicians and I would hope and expect that we will see a similar track here. The debate has started and I think in the last six months or so there is a realisation that there is going to need to be a change and I would hope quite quickly we will see our politicians engage on this issue."

His comments came as Sainsbury's, the UK's third-biggest supermarket, recorded a 34th consecutive quarter rise in like-for-like sales, up 0.7% in the three months to 8 June, despite tough comparisons with the diamond jubilee last year.

This contrasts starkly with the fortunes of the UK's biggest supermarket Tesco, which reported a 1% fall in sales as the horsemeat scandal put a chill on its sales of ready meals.

Sainsbury's, which avoided selling unlabelled horsemeat in its products, also reported that sales of its upmarket Taste the Difference range had been growing at 10% to reach £1bn in sales.

According to Kantar, Sainsbury's increased its market share by 0.2% to 16.8% over the quarter.

Last week King was awarded a 23% pay rise taking his overall remuneration to £4.3m, a sum he justified on the group's performance in the last year, when full-year profits rose 6.2% to £756m and shares rose 25% in the past 12 months.

He said: "My pay will go up and down with the performance of the business. We have had a strong year, that is reflected in a 40% increase in the bonus pot and that is what has driven my overall package up 23%. A year ago it had fallen 30% year-on-year, which demonstrates very clearly that we have a clear link between exceptional performance and extra reward."

The grocer, which opened 19 new convenience stores in the last quarter, said it was on course to open two convenience stores a week for the rest of the year. It also plans to open 10 or 12 supermarkets, although King said these would not be the big-box superstores with large non-food ranges favoured by rival supermarkets.

Online sales were up 16% year-on-year and convenience store sales rose 20% over the same period.


Simon Neville and Jennifer Rankin

The GuardianTramp

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