Coverage
of politics at Westminster is obsessing about every minor detail of the Brexit
discussions, while very little attention is being paid to the Budget, only a
few weeks away. What taxation changes do we want to see from the Chancellor of the Exchequer?
The challenge he faces will not be easy. Actually, the overall financial position of the
Exchequer is rather better than we might have expected a year or two ago (despite the ubiquitous and
ridiculous ‘fear’ predictions emanating from the Treasury before the EU
Referendum in 2016). But the recently announced massive annual £20 billion
increase in NHS investment will have to be paid for. There is also a real need
to increase investment in social care and defence.
So where is this extra money to come from? Over recent weeks I’ve received hundreds of
emails calling for an ‘Amazon Tax’, based on the belief that this would make a significant difference. It will not. Because Amazon is such a massive worldwide business, with a market
capitalisation of over £1 trillion, there’s a widespread assumption that paying
just £4.6 million in Corporation Tax is in some way ‘cheating the system’. It so happens that I too hope that the
Chancellor will find a way of extracting more tax out of the several worldwide
companies who do not have a High Street presence, but, as always, these internet based campaigns are not what they seem.
Firstly,
it’s not Amazon (the worldwide monolith) which is based in the UK - it’s a
subsidiary (Amazon UK Services) and it’s run from about a dozen giant
warehouses. Its profits in the UK are actually well below £100 million, a lot of money but not a base to make any significant boost to Treasury income. Even so, its
tax bill still seems lower than it should be. But it’s important to understand why. In 2000 the then
Labour Government introduced a scheme to encourage companies wanting to create
schemes giving shares to employees. Any company which did this could set the
cost against its Corporation Tax liabilities. I approved of this scheme. I still do. Do we really want to stop
this scheme. Personally, I think it a great idea to give employees a real stake in the
success of the business they work for.
Amazon
(and several others) are also said to have an unfair advantage over other more traditional retailers by
paying lower business rates. Now it’s true that Amazon has developed a business
model which is not based on the High Street, but is located in properties where business rates are
more affordable, enabling its prices to be more competitive. It is a very strange
campaign, supposedly acting in the interests of the people of the UK, which calls for the cost of what we buy to be forced higher - deliberately hitting consumers pockets.
And
finally, I cannot let this issue pass without a comment on the bizarre position adopted by the Archbishop of Canterbury, head of
the Church of England, publicly criticising Amazon for its business model - only for us to discover
that the Church itself has several millions of pounds invested in Amazon. And then criticising the employment practices of Amazon, which are replicated by the Church itself. This is as
blatant an example of hypocrisy as you’ll ever see! Yes, I hope the Chancellor
can find a way to raise more tax from the Amazon’s of our world. But let’s not
pretend it’s straightforward or would make any significant difference.
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