A trade association with a long history criticising Amazon has weighed into the debate as to whether the UK should introduce a specific tax on online sales – dubbed as the ‘Amazon Tax’ – as suggested by the UK finance minister, the Chancellor of the Exchequer, Philip Hammond last week. We wrote about the proposal here last Friday.
The managing director of the Booksellers’ Association has urged the government to ‘act quickly’ and introduce the ‘Amazon Tax’ to “rebalance the playing field” between physical stores and online retailers. She has said:
This can’t wait till post-Brexit – the tax burden on the UK’s high streets – and the advantages exploited by online retailers in the same arena – are having a parlous effect on the retail industry. It’s vexing that it takes high profile casualties like the House of Fraser to force the government to act, but we hope they will follow through. A ruinous business rates system affecting retailers large and small and the egregious tactic of transfer pricing by some online giants are a toxic pincer movement on our high streets, and only governments can make the difference required to allow for an equitable and fair system to be imposed.
– Meryl Halls, MD, Booksellers’ Association
Amazon started off as a bookseller and, from its earliest days, gained a reputation as a disruptive influence to what was, and to a great extent remains, a fusty industry. Amazon’s requirement for big cover price discounts on books angered publishers almost from day one. However, needless to say, Amazon won out in the end and went onto become a challenger to the entire retail sector, not just books. And when was the last time you paid cover price for a book?
But, even though this does seem like a bit of axe grinding, the more troubling aspect (again) is a complete lack of any real detail of what this tax will look like. It does feel like the desire is for Amazon to be hammered to pay more tax itself. But the failure to appreciate that many smaller retailers sell online and could be impacted by this tax is still worrying.
7 Responses
Everyone should stop calling it an “Amazon Tax”, as it it highly unlikely it will only apply to Amazon. It does make sense – I can see the logic – though as an online retailer it would very likely have an impact on me.
Meryl Halls needs to read what she’s written and act on that!
‘….the tax burden on the UK’s high streets…’
‘A ruinous business rates system affecting retailers large and small …’
I’d be keen to see some actual facts and figures. Eg. How many high street retailers also sell online. I’d expect it to be a high percentage.
VAT should be starting ground for tax reforms. Make it more of a sales tax. Fixed % for all sales / funds received on Amazon, ebay, PayPal, stripe, uber, airbnb. Etc etc. Collected by marketplace or payment provider. All payments are online so easy to take at source. More tax collected and less of a admin burden on business.
Great idea… tax something that is doing well to support something that is outdated in its current form and generally overpriced…
For example, if I go into Chester to buy – well let’s say a Book (instead of googling the info or buying it in ebook format)…
costings for that are:
1, Fuel for travel to Chester (heavily taxed as we all know) or Public transport (once again can be a hefty cost)
2, Parking in Chester if driving (can be £10 before you get out of the car)
3, Cost of the book (usually higher than online due to business rates being higher for retail premises rather than warehouse space, more staff needed to stand around waiting for a customer to come through the door etc)
4, Oh its raining… can I have it in a bag so it doesn’t get damaged? Wait what 5p for packaging?
That’s ignoring battling through traffic & modern social issues such as muggings, stabbings, acid attacks, terrorist attacks etc.
Along with work commitments – most people these days work 9am – 5pm, most shops open 9am – 5pm – I can order a book on Amazon 24/7 – you don’t get to Amazon and find a sign saying “Gone for lunch back in an hour”- Sundays are also an issue when the UK pretty much shuts down at 4pm.
Is it any wonder that Online sellers annihilate the high street when you can get the same item for less, delivered free without the stresses of the high street.
Instead of taxing an area of the economy that is doing well and providing a high level of employment (don’t forget its not just the e-commerce companies employees, its all the packaging suppliers, couriers etc who thrive because of the e-commerce economy) why not try supporting the high street by offering free parking (parking in some cities for an hour can be a hours work at minimum wage) reducing rents, rates & offering small businesses or online businesses incentives to open a high street presence in an empty shop?
@Stephen Wright
100% agree ,
well said sir
Business rates are the issue. They are a strangely unbalanced method of taxation that favours some businesses over others.
They only account for a small section of the total UK tax revenue and could easily be replaced with something else, eg. a low percentage tax based on turnover that all businesses pay regardless of whether they are home based, in a warehouse or a prime retail location.
This would mean a more level playing field that the high street want and it would also remove some of the barriers small businesses face when they are trying to expand, such as the double whammy of an increased bill for renting larger premises and a hike in rates on top of that.
I wonder how this will work for businesses with online and high street presence. Does it mean double taxation?