Amazon pays precious little tax in the UK and has too much power. But I still broke my boycott of the online retail giant.
Just over a year ago I wrote an article that sparked a huge amount of discussion among our readers. In ‘Why I’m boycotting Amazon and where I’m going instead’, I said I was no longer going to use Amazon for three reasons:
- The company pays very little tax in the UK
- It has too much market power and can bully other players such as publishers
- It’s damaging the high street by killing bookshops and other retailers
Many readers agreed with me, but a good number felt I was talking nonsense. They argued that Amazon offered excellent customer service and low prices and saw no need to boycott the online retail giant.
Confession
Those Amazon supporters can now have the last laugh because I confess that I didn’t stick to my boycott.
[SPOTLIGHT]I steered clear of Amazon from April to October, but when I wanted to get hold of a pretty obscure DVD very quickly, I succumbed to temptation. The only place I could find the DVD was on Amazon Marketplace – offered by a small seller – and once I’d broken the boycott, I returned to the site several times.
The truth is Amazon is a fantastically designed site and I really enjoy browsing there and finding more things that I’d like to buy. And any item I’ve ordered has always been delivered on time and intact.
So given my track record, it would be foolish to promise to boycott Amazon again. But the company still irritates me.
I think it’s very damaging when a particular player in a market gains too much power. It means that competition is reduced and people like you and me lose out eventually – I think that’s clearly happening in the UK book market, and possibly some other markets as well.
Tax
And Amazon’s pathetically low tax payments in the UK also really get my goat. Last year the company generated sales of £2.9 billion in the UK. The goods were delivered from warehouses in the UK and sold in sterling, yet Amazon apparently paid just £2.8 million in UK corporation tax. This was because the sales were supposedly ‘handled’ from Luxembourg.
It’s a similar story with Google. It reportedly paid just £10 million in UK corporate taxes between 2006 and 2011. A few days ago I saw an interview with Eric Schmidt, Google’s CEO, where he argued his company’s conduct was acceptable on the basis that no laws had been broken.
I think that’s a ridiculous argument. I accept that Google hasn’t broken any laws, but let’s look at our own lives. It’s possible that we’ve done things that are morally wrong but are perfectly legal. For example, cheating on a spouse or not helping an elderly neighbour. Google likes to present itself as a moral company, but staying within the law on tax isn’t sufficient to achieve that goal.
What’s more, companies like Amazon and Google benefit hugely from the fact that the UK has an educated workforce, reasonably good infrastructure (roads, etc), as well as a well-regarded legal system that can adjudicate on commercial disputes.
All this comes at a cost, but the big US tech companies aren’t willing to pay their share. Yet some of the UK’s best known businesses are prepared to pay a decent slug of Corporation Tax. According to Ethical Consumer, John Lewis paid 35% tax on its profits last year while Next paid 26%. Both of these companies are highly successful. Paying their fair share of Corporation Tax doesn’t prevent them from performing well as businesses.
What can we do?
The problem with all of this is it’s hard to force the likes of Google and Amazon to pay more. They’re able to employ highly skilful tax lawyers who can exploit generous tax laws in countries such as Ireland.
Politicians in the EU and US need to do more work to try and persuade the well-known tax havens to tighten up their rules. In fairness, George Osborne has been trying to do that.
Customers can play their part too. We need to make it clear that we don’t approve of what is happening.
I'm embarrassed I don’t have the willpower to boycott Amazon completely, but I will at least try and limit my spending there. I'll also encourage others to take the same approach. Then we can hopefully make a difference. Don’t forget, if Google and Amazon pay more tax, there will be more money for schools, hospitals and better roads as well.
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