Being successful in business is all about cutting your costs and increasing profits. Luckily if you’re Amazon, getting away with not paying what should into the economy helps you achieve these goals with ease.
It seems every year there are questions and criticism surrounding the morality of big businesses ability to evade paying tax, as well as the other unsavoury ways they avoid contributing to the economy of the countries in which they work. The latest culprit is e-commerce behemoth Amazon. It has recently been disclosed that they only paid £63.4 million in business rates (charges for property used for non-domestic purposes) in 2018, while their sales in the UK netted £8.77 billion that same year.
In comparison, high street retailer Next paid £100m in business rates on sales of £4bn. This amounts to around 2.5% of Next sales, whilst in the case of Amazon their business rate payments are less than 1% of their overall sales in the UK. For Debenhams, who had a tough financial year, 3.5% of their sales went towards business rates, as they paid £80m on a comparably low £2.3bn for the year.
An official blog post by Amazon stated “online sales are still less than a fifth of total sales in the UK and Amazon is a small percentage of that – perhaps a lot less than people realise.”
Statistics from 2017 show Amazon held a third of all online spending in the UK, a figure which will likely be even greater for 2018. This is a huge market share from a company who are downplaying their success in order to explain away their low tax contributions.
These figures are increasingly important as avoidance of these payments by companies such as Amazon clearly has a drastic effect on our high street shops. This past Christmas was the worst for Britain’s high street since the 2008 financial crash. Helen Hayes MP voiced concern that businesses in her constituency are struggling more and more every year and that “They cite business rates as the single biggest contributory factor, many of them, to the particular pressures that they have faced over the past year.”
Jake Berry, Minister for the Northern Powerhouse and Local Growth, has said the Government are planning to introduce a digital tax in order to “level the playing field” between online and high street retailers. However, he confirmed the treasury were responsible for adjusting business rates.
The disappearance of the high street may be an inevitability as the ease of online shopping pushes more people to turn to their electronic devices for purchases rather than their local shops. Whilst the high street still exists, however, the Government have a responsibility to ensure online retailers are paying their way the same as their brick and mortar counterparts.