by Sir Keir Starmer and Rachel Reeves have painted themselves as friends of British shoppers.
“Under the Conservatives, Britain’s high streets are dying,” Labour claimed, saying the party would work to “renew our high streets and bring economic growth back to towns and cities throughout the country”.
A key promise is to level the playing field when it comes to taxation, promising to “raise the same revenue but in a fairer way”.
It aims to make online retailers pay more to protect high street businesses.
However, many retailers complain that Labor is ignoring a major tax problem.
After months of calls to shut down tax loopholes used by Shein and Chinese online shops, the party effectively shut him down.
Under the loophole, companies are able to avoid hefty customs bills by sending individual parcels directly to overseas customers, rather than transporting products in bulk to Britain and then sending orders to shoppers.
Customs charges are based on value and orders from Shein usually fall below the level at which levies are incurred.
British businesses complain they are being unfairly undercut.
One industry leader said the current system was “b—– stupid”, adding: “These companies are hurting the retail sector by using these gateways to bypass UK import duty.”
On current projections, it will be up to Labor to address the issue.
Labor says there are no plans to close the loophole, although insiders claim this is because the issue is not a priority.
The Labor Party made no further comment.
It may not be high on the priority list as Shein risks a £50bn listing on the London stock market, which would provide a leg up on the struggling exchange.
However, it threatens to become a central point of friction between Labor and retailers, with claims that the decision to retain the loophole is a cynical move to lure Shein to London.
A veteran boss said it would be short-sighted not to end the tax arrangement.
Ultimately, they argued, the loophole is reducing the amount of tax revenue the Government is able to collect from the retail industry.
“What we have gradually seen is a reduction in tax revenue for the same amount of retail activity.”
A “head-in-the-sand approach” among politicians risks making the problem worse, they argued, as more customers switch from the high street to overseas retailers taking advantage of the loophole.
It’s true that its low prices have helped attract more shoppers, with dresses selling for as little as £2.10.
Shein’s UK revenue hit £1.1bn in the 16 months to December 2022. Analysts predict it will be Britain’s sixth largest retailer by 2027.
The Retail Sector Council, which counts the bosses of Boots and Sainsbury’s as members, said last year that ignoring the issue would lead to “more business failures, less taxation and more unemployment”.
Shein claims that the tax exemptions are not behind its rapid growth, saying that its success “comes from our ability to produce fashionable products for our customers”.
It says it can keep prices affordable through its on-demand business model and flexible supply chain.
A spokesman said: “We offer this benefit to our customers, and this is what has driven our success around the world, not the exemptions retailers receive under the current tax systems.”
Import duties kick in for shipments worth £135 or more.
Although HM Revenue & Customs said they did not have figures on how many parcels fall under this threshold, other countries provide some clues to the scale of deliveries.
In the EU, the number of parcels under the bloc’s customs threshold – a declared value of less than €150 (£126.89) – hit two billion last year.
In the United States, official figures show that between 2018 and 2022 the number of shipments that avoided customs fees increased by 67pc to 685.5m.
A House of Representatives committee said it believed Shein and Temu, another Chinese retailer that ships directly from factories, accounted for about a third of those.
Officials are planning various steps to close tax loopholes in the US and EU.
Richard Allen, from Retailers Against VAT Abuse Schemes, says Britain has been slow to act and blames Brexit, which he argues has left gaps in the system for collecting VAT and duties.
Allan says the next government has an opportunity to “find a solution [to the tax loopholes] that would be better than everyone else[’s] around the world”, given the Brexit freedoms.
So far, both Labor and the Conservatives are in limbo.
Alerts from high street retailers have gone unanswered.
Time is not on his side.
“Shein is going to expand into different categories beyond fast fashion,” says Brittain Ladd, a former Amazon executive.
“This will result in a huge increase in the amount of products that Shein imports. Shein will destroy UK retailers.”
London’s workforce may be keen to land a huge stock market as part of an effort to support growth.
But retail leaders are concerned that this does not come at the expense of UK businesses.
“It would be like shooting themselves in the foot,” says a chief.
