Sunday 27 January 2013

Finally tackling Amazon's tax affairs

The online retailer Amazon considered at the start whether to launch on a native American reservation in order to avoid paying sales tax.  Now, finally, and not before time, the company is being forced to pay sales tax in three hefty US states - California, Texas and Pennsylvania.

I am pretty optimistic that this is the start of a long-term trend, which is happening much slower over here - that the big corporations will be expected to pay their way.  The prospect of John Lewis being the last multinational retailer paying their fair share of tax must have struck terror into the heart of Revenue & Customs - and this must eventually filter through to the Treasury.

If some retailers are allowed to carry on avoiding reasonable taxes, then they must in the end drive out those which pay tax.

The main worry, it seems to me, is that - while successive governments have allowed the big corporations to pay as much or as little tax as they want - they have also turned a blind eye to their dominance in their respective markets.

The result was, when the furore about tax avoidance hit the UK, the only company which bothered to respond was the only one with any competitors.  Amazon and Google simply ignored the fuss.  Starbucks did not.

Neither the traditional right nor left has ever worried much about monopoly - it is a Liberal concern, about too much market power.  And while the Liberals have been excluded from government, the competition authorities quietly snoozed, allowing Tesco to build up a 30 per cent market share, letting Amazon take over the Book Depository, their only UK competitor in the book trade.

Which is all a way of saying that, now that the financial authorities are beginning to act on corporate tax, they must begin to turn their minds to cutting monopoly power.  Otherwise we will be left with a choice of whether it is going to be Google, Amazon or Tesco which pluck us and stuff us.

1 comment:

Anonymous said...

Just one correction - Amazon is not being forced to "pay" tax, they are being forced to "collect" tax from consumers. Pretty big difference.