A working group has been set up to attempt to level the playing field between tax paid by online and store-based retailers.

The BRC has set up the working group after Kingfisher chief executive and BRC chairman Ian Cheshire called for a “strategic rethink” of the tax system.

Cheshire and Sainsbury’s chief executive Justin King have met with Treasury chief secretary Danny Alexander in the last month to discuss the issue, The Sun reported.

Cheshire said: “We have a 19th century tax system for a 21st century retail economy.

“The increase in rent and rates is squeezing the high street, forcing the shuttering of shops and leading to higher vacancy rates. For each £1 of sales, the online guys pay a lot less tax and we need a strategic rethink.”

He added: “We don’t want to be simply seen as whingeing. We’re not looking for a free pass, but a level playing field.”

A transaction tax on both etailers and store-based retailers are among the proposals, it is understood.

Cheshire said his calls were unrelated to the campaign on companies including Google and Amazon to pay their share of corporation tax.

But he added: “I think I read that Amazon got more in Government grants than it paid in tax. That seems unsustainable.”

High street retailers are already struggling after business rates rose 2.6% in April, adding £175m to retailers’ costs.