ONLINE retail giants like Amazon should be slapped with a one per cent online sales tax ahead of the March 3 Budget, says Tesco.

The calls comes as bosses at UK supermarkets, high street chains and retail property owners call on Rishi Sunak for an overhaul of the current tax system to put them on a “level playing field” with online rivals.

Tesco boss Ken Murphy is among 18 chief executives to sign a letter to the Chancellor calling for a permanent reduction in business rates.

The move comes Treasury sources confirmed Mr Sunak is indeed considering targeting companies that have done well out of the pandemic in order to help fill the black hole of UK Government debts incurred while supporting industries through the coronavirus crisis.

Leaked emails showed Treasury officials have summoned tech firms and retailers to a meeting this month to discuss how an online sales tax could work.

Amazon sales in the UK soared by 51% to almost £20 billion last year as lockdown restrictions buoyed the e-commerce giant, with people forced to buy online due to Covid restrictions.

Delivery firms such as Deliveroo and online retailer Asos were also among those to see profits spike during the lockdowns of the past 12 months.

Retailers, leisure and hospitality firms have not had to pay business rates for the current financial year after the UK Government launched a rates holiday at the onset of the pandemic.

However, the property tax is currently set to restart in April for the new financial year despite non-essential retailers remaining shut due to lockdown restrictions.

A significant number of essential retailers, including the UK’s six largest supermarket chains, handed their rates relief back to the state in a move worth more than £2 billion.

However, retailers have now said that failure to reform the rates system in the next Budget “will hamper the recovery of the retail sector post-pandemic, potentially putting thousands of jobs at risk”.

The letter, which was also signed by Asda chief Roger Burnley and Morrisons chief David Potts, warned that nearly 15,000 retail jobs have been lost already this year and “there will be many more to come”.

The coalition of retailers and landlords said reform should ensure that online retailers pay similar levels of tax to brick and mortar firms.

The letter states: “Reducing business rates for retailers and rebalancing the tax system to ensure online retailers pay a fair share of tax would be revenue-neutral, provide a vital boost to bricks and mortar retailers and support communities in need of levelling up.”

It falls short of specifically calling for an online sales tax but Tesco has renewed its calls for the biggest online players to be hit with a 1% levy.

A spokeswoman for Tesco said: “Our stores and our colleagues do a fantastic job serving customers and communities every day. We have seen over the years how the burden of business rates has increased and how this burden is felt more heavily in areas of the UK that are most in need of investment and levelling up.

“We believe strongly that there should be a level playing field for all retailers, online or physical, which is why we propose a one per cent Online Sales Levy for businesses with annual revenues over £1 million in addition to a 20% reduction in business rates.

“Now is the opportunity to reform business rates and create a system that is fair and sustainable for all.”

A Treasury spokesman said: “We want to see thriving high streets, which is why we’ve spent tens of billions of pounds supporting shops throughout the pandemic and are supporting town centres through the changes online shopping brings.

“Our business rates review call for evidence included questions on whether we should shift the balance between online and physical shops by introducing an online sales tax. We’re considering responses now.”

Despite Amazon making close to £20 billion in profits in 2020, real estate adviser Altus Group said the sales giant had a tax to turnover ratio of just 0.37%.

Altus said, when looking across Amazon’s entire UK estate – including warehouses, offices and its pick-up and drop-off lockers – its overall business rates liabilities were estimated to amount to around £71.5 million at the start of the 2020/21 financial year.

In comparison, before the onset of the pandemic, the Centre for Retail Research said high street retailers paid around 2.3% of annual retail sales in business rates.

Robert Hayton, UK President of Altus, said Covid-19 had “driven online sales, accelerating the need to address the disparity in tax to turnover ratios”.

However, Helen Dickinson, Chief Executive of the British Retail Consortium, said ministers had to be careful not to hinder the ability for businesses to recover from the epidemic.

“The key to reviving our high streets is fundamental reform of the business rates system and we oppose any new taxes that increase the cost burden on the industry which is already too high,” she said.

“Economic recovery after Covid will be powered by consumer demand; the Chancellor should ensure he doesn’t introduce any new taxes that stifle this.”

But former minister Tobias Ellwood urged the Government to make Amazon and other internet corporations “pay their fair share”.

In a newspaper article, the Commons Defence Committee Chairman said high streets were being “emptied of shops” as Amazon paid “derisory amounts of tax and whose physical presence is merely a few giant warehouse hubs”.

He added: “The task may be daunting. But what better time than now, when governments seek ways to repair the huge economic damage caused by coronavirus?”

Amazon said it would not comment on the online sales tax reports.

A spokesman instead highlighted its investment into the UK, saying: “Last year, we created 10,000 new jobs and last week we announced 1,000 new apprenticeships.

“This continued investment helped contribute to a total tax contribution of £1.1 billion during 2019 – £293 million in direct taxes and £854 million in indirect taxes.”

Mr Sunak is not expected to propose a so-called “Amazon tax” in his March Budget.

It is thought he will instead look to extend furlough and the business rates holiday to support struggling businesses.

Labour is calling for him to announce any additional support for industry before next month in order to remove uncertainty.

Anneliese Dodds, the Shadow Chancellor, also wants the temporary 5% reduced rate of VAT for the hospitality, tourism and culture sectors to continue for another six months, or until three months after the lifting of health restrictions – whichever comes later.

The reduced rate is set to expire on March 31, when it will return to 20%.

Ms Dodds said: “The Chancellor has acted at the last minute time and again during this crisis and that dither and delay has created uncertainty for businesses, cost jobs and threatened our recovery.

“Britain can’t afford the Chancellor to make the same irresponsible mistake all over again. He must announce these continued tax cuts now, not wait another month and risk even more job losses,” she added.