More than 70 fashion companies, including H&M Group, The RealReal, and Inditex, are calling on governments to end the double taxation of secondhand and repair.
A jacket purchased at a department store and resold on a secondhand platform like The RealReal has, by the time it reaches its second owner, been taxed twice: once at the original point of sale, and again when it changed hands on the resale market. A coalition of more than 70 fashion companies signed a joint policy statement arguing that this is one of the primary reasons the resale market — growing at five times the rate of traditional retail — has never come close to the profitability it should have.
The statement, organized by the Ellen MacArthur Foundation under the banner of the Fashion Remodel, calls on governments in the E.U., U.S., and Canada to reduce or eliminate sales taxes on resold goods and repair services, lower labor taxes for circular business jobs, and establish Extended Producer Responsibility policy to build the collection and sorting infrastructure that circular fashion requires at scale. The signatories range wide enough — Zara’s parent company Inditex alongside Stella McCartney, Primark alongside Eileen Fisher — that the coalition itself warrants examination; the companies are united not by a shared sustainability ethos but by a shared experience of what it costs to operate in a market that was never designed for them.
“We need a circular economy for fashion, but it is being held back,” reads the statement. “Businesses reselling products are taxed at every transaction, not just at the original point of sale. It is this economic trap that disincentivises keeping products in use.”
The U.S. secondhand apparel market expanded 14 percent in 2024, outpacing the broader clothing retail market by five times, according to ThredUp; online resale grew 23 percent that same year, its second consecutive year of acceleration. Vinted, the peer-to-peer platform founded in Lithuania, saw its net profit jump 330 percent year-on-year. The RealReal, a luxury consignment platform that spent nearly a decade operating at a loss, became profitable in 2024, posting $600 million in revenue. Tariffs are adding yet another tailwind; 59 percent of consumers told ThredUp that if new trade policies make apparel more expensive, they would turn to secondhand first.
Taxed twice
Resale and repair are labor-intensive by nature — sorting, cleaning, listing, mending; operations that do not compress the way high-volume manufacturing does — and they are taxed at every transaction, not only at the original point of sale. The market has absorbed these disadvantages through consumer enthusiasm and investor patience, the latter of which has a tendency to run out. Producing a new item from virgin materials, meanwhile, remains the more economically rational choice, optimized manufacturing and comparatively favorable tax treatment doing most of that work.
The Ellen MacArthur Foundation’s research models what changes on the other side of that gap. With targeted interventions — reduced VAT in the E.U., eliminated sales tax in the U.S. and Canada, and lower labor taxes for circular jobs — gross margins for resale operations could reach 55 percent; for repair, 41 percent. If those savings were passed through to consumers instead, the Foundation estimates the resale market share in the E.U. could have reached 12 percent, and 14 percent across the U.S. and Canada, in 2023 alone, had the policies been in place.
The U.S. secondhand apparel market is projected to reach $74 billion by 2029, growing at twice the rate of the broader industry. Rachel Kibbe, founder and CEO of American Circular Textiles, a coalition that has been pushing for double-taxation reform in the U.S., has been making this case to legislators for several years. “Ending double taxation is not only the fair and just thing to do,” Kibbe told Sourcing Journal, “it will also spur economic growth and strengthen the trend toward shopping for well-made clothing that can be reused and/or repaired rather than tossed into the ever-growing piles of apparel waste.”
The balance sheet
The industry has spent years making the environmental case for circular fashion, and that argument, calibrated to conscience rather than capital, has moved policy only so far. The Fashion Remodel framing presents resale and repair not as accommodations for sustainability-minded consumers but as an unrealized economic category that the current tax structure is actively suppressing. Nora M. Cummings, vice president of retail and impact at Fashionphile, a luxury resale platform, said in a statement supporting the campaign that “we believe we can make a powerful case for sustainable shopping choices if work is done to mitigate the financial strain that these taxes place on consumers.”
The coat on the consignment rack is already the first choice for a growing number of shoppers; for many, it is the smarter purchase by almost any measure except one. What it has not yet become, for the businesses selling it, is the more profitable one — and the companies behind this statement argue that that gap is not a market problem. It is a tax problem, and tax problems, unlike cultural ones, have a fairly direct solution.
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