Retailers demand major overhaul of business rates after Next Christmas sales slump 9.2 per cent | Daily Mail Online
Today, further figures came out:
Christmas sales: the winners and losers on the UK high street | Business | The Guardian
Meanwhile, Amazon has just announced how little it pays in business rates:
Amazon accused of 'gaming the system' on business rates - Telegraph
Here is comment from the Mail, just posted:
Iniquitous injustice ripping apart communities
Commentary by Ruth Sunderland
This week an entrepreneur named Simon Key was forced to compose an announcement that the Big Green Bookshop, an independent store he co-founded a decade ago in North London, is to shut because of ‘absolute monster’ business rates.
As he was contemplating an uncertain future, Amazon – whose online might has been a scourge of independent bookstores – revealed in a letter to MPs that last year it paid £63million in business rates. That is a paltry sum in relation to its £8.8billion of UK sales.
Its corporation tax payments are even more derisory.
The most recent tax bill for its warehouse operations, Amazon UK Services Ltd, was a slender £4.7 million. And it didn’t even pay it all, deferring some of the charge – perfectly legally – and only handing over £1.7 million. You may not be surprised to learn that the Big Green Bookshop paid a higher proportion of its profits in tax and rates than the U.S. Goliath.
The letter revealing Amazon’s obscenely small direct contribution to Britain’s public purse exposes the gaping loopholes in our system, and the advantage to be gained by online firms which rely on massive out-of-town distribution centres with far lower rates than town centre bricks and mortar traders.
So it is that shameless overseas mega-companies get away with minimal payments, while costs are piled without mercy on high-street business owners.
While it’s easy to identify this injustice, it is harder to work out what should be done. There are no easy or painless answers. But effective solutions must be found, and fast. Otherwise, the high streets will disintegrate as thousands of entrepreneurs who are the backbone of the economy are forced to give up the ghost.
Entrepreneurs, that is, like Simon Key, who set up his bookshop because there wasn’t one locally. He is continuing his business online, but independent bookstores are about more than just ringing up sales, they are about the soul of the community.
When his shop shuts, it will also be an end to the children’s drama workshops and visits by local authors. And what will arrive in their place?
Most likely a betting shop or a fast food shack.
The trouble is that there’s no room for sentiment on the British high street, which has suffered its worst Christmas since the financial meltdown in 2008, with companies like Marks and Spencer, Debenhams and House of Fraser expected to report very patchy trading over the festive period.
Yet as once-proud stores struggle with weak sales and rising rates bills, Amazon continues to gorge on the income it makes from British consumers.
This week it became the most valuable company in the world, worth just under $800 billion on the U.S. stock market.
Founder Jeff Bezos is the richest man on the planet with a fortune of £107billion. His divorce from wife MacKenzie, announced yesterday, will be the most expensive in history – but even after that he will be spectacularly wealthy.
To put that vast wealth – embellished by low tax bills in the UK – into perspective, he could, as an individual, buy Marks & Spencer 20 times over and still have billions in change.
Like millions of other Amazon customers, I am a fan of its low prices and fast deliveries. The company has invested billions of pounds in the UK and provided thousands of jobs, including high-level research roles, which is to be applauded.
Yet these benefits are coming at an unacceptable cost. Amazon is doing nothing illegal. The problem is that the tax system here, and in other developed nations, is grievously outdated.
It was devised for an era which no longer exists, when all businesses were ‘bricks and mortar’ companies. Now the corporate tax and rates rules are unfit for purpose. In particular, too much tax is extracted through business property, giving a massive unfair advantage to those who operate largely online.
Amazon argues that it does pay national insurance, PAYE and other taxes. But it pays far too little through the corporate tax and rates system towards the schools that educate its workforce, the hospitals that treat them, and the roads its lorries and vans speed along with our parcels.
So what can be done? In his most recent Budget, Chancellor Philip Hammond announced some measures, including plans to cut business rates by a third for almost half a million small high street shops.
He also unveiled a ‘digital services tax’ on online operators, though this is only expected to raise £400million by 2021-22, which is chicken feed compared with their revenues.
These are welcome moves, but not enough.
The first obvious point is that Amazon and other Silicon Valley operators must be forced to come clean on the business rates and corporate taxes they pay here. At the moment, Amazon operates through a number of different UK subsidiaries and it is virtually impossible to make sense of its full tax situation.
City watchdogs should bring in a new rule that all companies above a certain size must disclose their total corporation tax and business rate payments in a simple format so the public can see exactly how much – or how little – they are handing over.
Armed with that information, consumers might decide that if lower prices online come at the expense of reduced tax funding for public services, they would prefer to take their custom elsewhere.
Corporation tax needs wholesale reform. It is charged on profits, which can easily be manipulated when offset against apparent losses, rather than sales, which are far harder to fudge.
As for business rates, they are a vital source of income for cash-strapped local authorities who need to pay for essential services.
So the money needs to come from somewhere.
One possibility is to cut, or even abolish, business rates and make up for the lost income by increasing the rate of VAT or introducing a new online sales tax. This would no doubt provoke objections that consumers, rather than businesses, would end up paying more.
The truth is that all taxes are, in the end, paid by individuals. The overall tax take would be the same, it would just be redistributed more fairly, with Amazon paying more and traditional retailers less.
There is scope for more imaginative measures, too, including a green ‘delivery tax’ on the vehicles used to deliver goods. There would need to be exemptions for small firms and sole traders to avoid penalising ‘white van man’ unfairly, but the delivery culture is adding hugely to emissions and road pollution.
A tax on the plastic packaging used by Amazon, on the same principle as the plastic bag charge in shops, is another possibility.
The fact is there are no magic wands to save the high street in its current form, but allowing Amazon to continue making billions to enrich its founder and its shareholders at the expense of our public purse should not be an option.
Amazon outrage 'shows we MUST reform business rates': MPs pile pressure on ministers | Daily Mail Online