By Ben Kerrigan-
Andy Burnham has set out a controversial overhaul of the UK’s business rates system that would see large online retail warehouses face higher taxation in order to fund sweeping relief for pubs, cafés and high street shops, if he becomes prime minister.
Speaking in an interview, the former Greater Manchester mayor and emerging figure in national politics argued that the current system unfairly penalises community-focused businesses while allowing vast logistics hubs serving online giants to pay comparatively less relative to their economic impact on local high streets.
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His proposal, widely dubbed an “Amazon tax”, would redirect the tax burden towards large distribution centres while easing costs for smaller bricks-and-mortar businesses. The plan forms part of Burnham’s broader pitch for what he describes as a “fairer, place-first economy”, where economic policy is shaped around community benefit rather than pure turnover or digital scale.
Under the proposals, pubs and small independent retailers could see reductions in business rates of around 20%, with some smaller businesses potentially removed from the tax altogether depending on their size and location.
Burnham’s argument is rooted in the growing divide between online commerce and physical retail. Over the past decade, high streets across the UK have faced sustained decline driven by shifting consumer habits, rising operating costs, and the rapid expansion of e-commerce fulfilment networks.
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Critics of the current system argue that it fails to reflect this transformation, placing disproportionate pressure on businesses that provide local employment and social value.The proposed changes would represent one of the most significant restructurings of business taxation in decades, effectively shifting part of the tax base from retail premises toward logistics infrastructure linked to the growth of online commerce.
Parliamentary briefings also show that successive reforms have focused on adjusting multipliers and reliefs for retail while increasing relative pressure on large distribution warehouses, rather than replacing the system outright.
Burnham has insisted that the reforms would remain consistent with Labour’s 2024 manifesto commitments not to raise headline tax rates such as income tax, VAT or National Insurance contributions, instead relying on redistribution within the business rates system, a direction also reflected in recent Budget documentation confirming that major fiscal changes have avoided increases to those core national taxes.
Industry groups have long warned that high street businesses are struggling under a combination of business rates, energy costs and wage increases. Recent data has shown that a significant share of pubs and restaurants are operating at a loss, intensifying pressure on policymakers to intervene. The hospitality sector in particular has repeatedly called for targeted relief, arguing that current tax structures do not reflect the social and cultural role of pubs in local communities.
Burnham’s proposals also reflect a wider political shift towards rebalancing economic geography in the UK, with a growing emphasis on decentralisation and shifting power away from Westminster. His emerging policy platform includes plans to extend devolution by giving greater decision-making powers to regional authorities and mayors, with the aim of ensuring “power flows” more evenly across all parts of the country rather than being concentrated in London.
The same reports highlights his proposal for a “No 10 North” in Manchester, intended as a northern hub of government that would act as the “nerve centre for a rewired Britain” and help coordinate national policy with regional growth strategies.
Together, these reforms form part of Burnham’s broader vision of a more decentralised state, where economic and political authority is redistributed to better reflect regional needs and reduce the long-standing dominance of Whitehall. Whilst Burnham’s plan has gained attention for its ambition, it has also sparked debate over its economic consequences and political feasibility.
His supporters argue that taxing large warehouses operated by online retailers could help correct distortions in the tax system that favour digital giants over traditional retailers. They say the measure would help preserve jobs, social spaces and independent businesses that anchor town centres.
However, sceptics of his vision caution that such a policy could have unintended consequences for supply chains and consumer prices. Large logistics operations underpin much of the UK’s e-commerce economy, and higher costs on warehouses could eventually be passed on to consumers or small businesses reliant on online platforms.
Economists also note that business rates reform has long been considered one of the most complex areas of UK taxation, due to the difficulty of fairly valuing commercial property in a rapidly changing economy. Previous attempts at reform have often resulted in partial adjustments rather than structural change, raising questions about whether Burnham’s proposal could be implemented in full without wider tax shifts.
Despite this, the political appeal of the plan is clear. The idea of an “Amazon tax” resonates with longstanding public concerns about the decline of the high street and the perceived imbalance between multinational corporations and small local businesses.
Burnham has framed the issue not only as an economic question but as a cultural one, arguing that pubs, cafés and shops play a central role in community life that cannot be replicated online.
The debate is likely to intensify as pressure mounts on government to support struggling hospitality venues and revitalise town centres. With the cost-of-living crisis still affecting consumer spending and business margins tight across the retail sector, business rates reform is expected to remain a central issue in UK economic policy discussions in the months ahead.
Many pubs, cafés and independent retailers continue to report that rising energy bills, higher wage costs and reduced discretionary spending are squeezing profitability, leaving little room to absorb fixed costs such as rent and business rates.
In several town centres, this has translated into reduced opening hours, increased vacancies and a growing reliance on national chains rather than independent operators. Local authorities, already facing constrained budgets, have warned that prolonged decline in high street activity also reduces footfall, further weakening surrounding businesses and diminishing local tax bases.
Policymakers are under growing pressure to respond to the structural shift toward online retail, which has accelerated since the pandemic and permanently altered consumer behaviour.
While e-commerce has delivered convenience and price competition, it has also contributed to declining footfall in physical retail spaces, raising questions about how to sustain town centres as social and economic hubs. This has intensified calls for reforms that better balance taxation between digital-first firms and traditional high street premises.
However, any move to significantly reform business rates remains politically and technically complex. Governments must balance competing priorities: protecting local businesses, maintaining stable public revenues, and avoiding unintended consequences such as higher prices for consumers or supply chain disruption.
Previous reform attempts have often resulted in incremental adjustments rather than sweeping change, reflecting the difficulty of redesigning a system so deeply embedded in the UK’s fiscal structure. Business rates reform is increasingly viewed not just as a technical fiscal issue but as a broader question of regional inequality, economic identity and the future of community life in towns and cities across the UK. With these pressures converging, the policy debate is expected to remain firmly at the centre of the political agenda.
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