RISHI Sunak has come under pressure from a clan of top retailers to cut business rates for shops with suggestions funding could be raised from an online sales tax.

A temporary group calling itself the Retail Jobs Alliance - involving the likes of Tesco, Greggs, Waterstones, and J Sainsbury - has written to the Chancellor to demand he "cuts the shops tax".

The Alliance said it was writing to him on behalf of organisations employing more than one million people, or a third of the industry's workforce.

It said the Alliance would be "making the case for an overall cut in business rates for all retail premises, and we are open to the possibility of funding this through the introduction of an online sales tax".

In their letter to Sunak, the retailers said: "We are all, like you, acutely concerned with pressures on household budgets and the rising cost of living, and we all have a role to play in keeping costs down as far as we can.

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"Business rates - the shops tax - are a significant part of retailers' overheads.

"A meaningful cut in the shops tax would make a big difference to retailers' ability to invest more in the shops and stores that we know customers value, as well as to create jobs.

"This would make it easier for everyone in the retail sector to mitigate inflationary pressures, keep existing shops open and open new ones."

It comes after a years-long argument about the balance between the taxation of physical and online retailers.

Earlier this year the Treasury launched a consultation on the merits of an online sales tax - which the Alliance plans to respond to before the end of the month - in the wake of a business rates review that claimed it would save firms £7 billion.

Lucy Frazer, financial secretary to the Treasury, said at the time: "Whilst we've made no decision on whether to introduce such a tax, it's right that, given the growing consumer trend to shop online, we work with stakeholders to assess the appropriate taxation of the retail sector."

Signatories of the letter to Sunak include Ken Murphy, the Tesco CEO; Sainsbury's boss Simon Roberts; Thierry Garnier, Kingfisher chief executive; Shirine Khoury-Haq, interim chief executive of the Co-op Group; and Rosin Currie, CEO-designate at Greggs.