UK Chancellor Rishi Sunak is considering levying an online sales tax against Amazon and other online retailers.

The levy would help the UK paydown the debts it has developed supporting businesses and industries during the Covid-19 pandemic.

In addition, an excessive profits tax could also be applied to companies that have seen their profits surge during the pandemic. As such, Amazon could be hit by both new taxes.

The new taxes will not be part of the upcoming March 3 budget. Instead, according to sources at the Treasury, the new tax will be considered as part of a business rates review later this year. The Sunday Times has said that leaked emails suggest that officials will discuss the possible online sales tax with tech firms and retailers this month.

Other online retailers that saw an increase in revenues during the pandemic could also be taxed, such as fashion retailers ASOS and Boohoo, or delivery companies like Deliveroo.

According to a Treasury spokesman: “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.”

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Tech giants Amazon, Google, and Facebook, saw massive surges in advertising revenues in the final quarter of 2020, helping push up their total income.

Amazon in particular saw a strong performance as the coronavirus drove people away from brick-and-mortar shops and onto the internet. Its revenue was up 44% compared to the final quarter of 2019, coming in at $125.6 billion, its first-ever $100-billion quarter.

Its total sales for the years were up 38% compared to 2019, coming in at $386.1 billion. Profits were around double 2019’s, or $21.3 billion. Amazon’s UK sales almost doubled in 2020, reaching close to £20 billion in 2020.

For the first quarter of this year, Amazon anticipates another $100-billion quarter, increasing sales from the first quarter of 2020 by around a third.

With Amazon’s booming sales coming at the expense of physical shops during the pandemic, Tesco Chief Executive Ken Murphy has called for a 1% tax rate to be levied against online retailers. With shop-based retailers facing a return to property-based business rates in April, Murphy joined 17 other bosses warning that the old system will jeopardise the post-pandemic retail recovery.

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However, prying taxes away from the tech giants can prove difficult, as the EU discovered in its recently reopened case against Apple. The bloc is alleging that Ireland, host to Apple’s European subsidiaries, applied a far lower corporate tax rate on Apple than its standard 12.5%, and is seeking the lost revenues.

A defeat in the court could prompt the EU to create new legislation to stop tech giants basing themselves in tax havens, such as taxing the companies at the point of sale, rather than on profits.