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Amazon’s Corporation Tax avoidance

Labour MP Jackie Ashley, writing in the Guardian today, complains about the tax avoidance antics of firms like Amazon. SOMETHING MUST BE DONE, she says. That something appears to be getting the tax authorities to act in a more aggressive way. But since this tax avoidance is legal, there is nothing that HMRC can do about it under present legislation – which Labour had thirteen years to do something about, but did not.

The article is illustrated by the photograph, of one of Amazon’s nine warehouses in the UK. It is obviously a high quality building. Like the other multinational tax avoiders, Amazon must pay a fair whack in business rates, so the obvious short term measure that could be taken would be phase out Corporation Tax altogether and collect the lost revenue through a hike in the UBR. This could begin at the next budget and phased in over a few years. Since that is an obvious quick fix, why can’t Ashley see it? And for that matter, since this is not a new problem, why didn’t the previous Labour government do it?

It is not in fact a solution that we would advocate except as a precursor to the more fundamental reform. Amazon has invested heavily in its buildings, which are modern and well-equipped. Under the UBR, they are punished for their enterprise. That is why we argue that the property tax should be on site values only. Since these warehouses are all, of necessity, in locations conveniently placed close to the motorway network, under a reformed property tax system Amazon will be required to pay its due, and no more or less than its due, to the UK government for the benefits of operating in the UK. However, since Amazon is probably, in most cases a tenant rather than the freeholder, it is already paying its due, but to its landlords instead of to the UK government. Amazon pays business rates. It pays rent to its landlords. The bulk of that rent reflects the value of the infrastructure in the UK that Amazon makes use of.

So it isn’t Amazon we should be worrying about, it’s Amazon’s landlords.