THE Government should urgently consider an online sales tax to help secure the future of the high street but local retailers must do more to offer the personal interaction that the likes of Amazon cannot, MPs have urged.

Dated policies and an unfair tax regime must be reformed to create an environment that will allow high streets and town centres to flourish in the future, a report published by the Housing, Communities and Local Government Committee (HCLG) has found.

Business rates are stacking the odds against high street retailers, with Amazon’s bill amounting to around 0.7 per cent of its UK turnover while bricks-and-mortar stores are paying between 1.5 per cent and 6.5 per cent, it said.

The Government needs to go “further and faster” to “level the playing field” by considering a sales tax, an increase in VAT, an online sales tax, and “green taxes” on deliveries and packaging, the committee concluded, adding that each of the proposals had the potential for “real change” without requiring a complete overhaul of business tax.

However MPs also said high street retailers must accept that they need to adapt and do more to offer what online cannot, focusing more on personal interactions and convenience.

Local authorities must also “get to grips with the fact that their town centres need to change” and create areas that are the “intersection of human life and activity”, the HCLG report concludes.

With online sales currently at 20 per cent and set to grow, the future for high streets and town centres is “increasingly bleak” with some formerly thriving shopping areas likely to become ghost towns unless the Government, councils, retailers, landlords and the local community act together to implement the recommendations, it warns.

Chairman Clive Betts said: “The growth of online shopping has profoundly changed retail in the UK, and the knock-on impact on high streets has been stark.

“It is likely that the heyday of the high street primarily as a retail hub is at an end. However, this need not be its death knell.

“Local authorities must get to grips with the fact that their town centres need to change; they need to innovate, setting out a long-term strategy for renewal, reconfiguring the town centre and finding new ways of using buildings and encouraging new independent retailers.

“Business rates must be made fair. They are currently stacking the odds against businesses with a high street presence and this must end.

“Tax reforms are needed to level the playing field between online and high street retailers, and we urge the Government to investigate all the options in this area, including an online sales tax.

“We must begin a period of renewal and regeneration, establishing high streets as focal points of our communities comprising green space and health, education and leisure services, as well as a core of retail.”

Richard Watts, chairman of the Local Government Association’s resources board, said: “We agree with the committee that the business rates system needs to be modernised to ensure that sectors such as online businesses make a fair contribution.

“Councils can do more to support small businesses and boost high streets with the freedom and finance to set business rates discounts and reliefs locally.

“They also need more powers and flexibility, particularly in relation to planning, to help shape and deliver vibrant town centres.”

Federation of Small Businesses national chairman Mike Cherry said: “Currently the tax system favours big online companies over independent businesses based on the high street, which are already facing a tough trading environment.

“The broken business rates system penalises firms, regardless of their profits or ability to pay.

“The new business rate discount coming into play in six weeks’ time should give some relief for smaller firms.

“Long term, there needs to be a serious overhaul of the unfair tax that hits firms before they’ve had the chance to make their first pound of turnover, let alone profit.

“We welcome the report’s call for fast action to level the playing field.”