Regulator calls for postage stamp tax

Postcomm, the postal regulator, is hearing views from the Royal Mail and private companies entering the market, but is understood to considers a 5% tax as one of the best options.

It is concerned the Royal Mail's VAT exempt status gives it an unfair advantage because competitors must levy the full 17.5%, The Independent reported.

The Treasury said it was opposed to the creation of a literal 'stamp duty'. But it said it would continue to monitor the VAT position as it supported the creation of a 'level playing field' in the sector.