UK Ethical Consumer mag, MPs call to boycott Amazon

Now it’s “Boycott Amazon” in the UK. And “the campaign to make Amazon pay a fair rate of tax,” steered by Ethical Consumer magazine, has been joined by a slew of British MPs, according to The Bookseller, including Public Accounts Committee chairman Margaret Hodge (already on record for her public complaints against Amazon), Austin Mitchell,  Natascha Engel, Meg Hillier, Margaret Hodge, John McDonnell, Michael Meacher, Graham Morris and Dennis Skinner.

ethical consumerEthical Consumer justifies its campaign – in appropriately brief, easy-to-understand terms – by claiming that “the UK’s number one tax avoider is Amazon.” Well, is it? Are they absolutely sure that no FMCG or other major industrial or commercial group does not have an offshore incorporation structure that ensures minimum corporation tax payments in the UK? Have they actually gone and checked against the accounts of other groups to confirm that the claimed 0.1 percent corporate sales tax  paid by Amazon’s UK subsidiary in 2012 – £3.2 million ($5.2 million) on sales of £4.3 billion ($7 billion) – is actually the lowest differential going? Have they checked to make sure that no one operating from a similar non-UK domicile has sold more?

Maybe it’s so. Perhaps Amazon is indeed the UK’s worst tax dodger. Or perhaps it doesn’t even need to be the worst to have done wrong. But know what? Cross-border incorporation structures exist. Tax optimization exists. MNCs have been using them for as long as they have been around. Did it really take this long for the penny to drop? Isn’t there may be just a little bit of bias and bandwagon-jumping creeping in to this Amazon hate campaign?

I’ve a better suggestion: Why not boycott the UK’s politicians? After all, see where all this venom is coming from? “Amazon’s tax revenues could help fund the vital public services that are now being slashed,” remarks Ethical Consumer‘s Tim Hunt, as quoted in The Bookseller. And why are those public services – including libraries, by the way – being slashed? Macroeconomic mismanagement by the last Labour government and a ferocious austerity campaign by the current Conservative-led coalition. Now are the politicians going to try to figure out a way to blame Amazon for that too?

 

4 Comments on UK Ethical Consumer mag, MPs call to boycott Amazon

  1. True, if only there was something like a legal body, duly voted into power by the people, able to pass legislation that would set rules under which companies could be taxed.

  2. Paul Mackintosh // December 1, 2013 at 4:45 am //

    Bill, I hope that wasn’t intended to be ironic. There is – in the UK it’s parliament; in the US it’s Congress. Only – companies have now grown beyond national borders. Sure, we can go back to the good old days of closed borders and protectionism, with the politicians lording it over their little walled fiefdoms. Or we can take their toys away. There are numerous international and inter-governmental agreements and forums to harmonize global corporation tax. I’m much more interested in hearing from any government anywhere why their politicians deserve control of any of your money.

  3. This again, eh?

    1. As far as I’m aware, no-one is claiming that Amazon is breaching any laws, but that they are using various (legal) means to reduce their tax bill. Are people are asking Amazon to pay more tax voluntarily (which would breach their fiduciary duty towards their shareholders)? Or do they want loopholes closed which enable companies like Amazon to reduce their tax bill? I presume it’s the latter, in which case its a matter for politicians to introduce legislation, should they so desire. A boycott will have zero effect.

    2. Amazon is hardly the only company which attempts to reduce its tax bill, and it’s hardly the only company moving profits around through various subsidiaries to pay as little as possible. I have a lot of sympathy with the idea that these loopholes should be closed, but why is the focus on Amazon? These corporate structures are used by all major international companies (Google, Apple, Intel, Microsoft, Ebay, PayPal, Twitter, etc. etc.). Shall we boycott the internet?

    3. If Amazon suddenly started paying more tax, do these people really think the Tories would reverse library closures?

  4. A case in point: Facebook. Financial results released today showed that Facebook paid approximately 1.9m Euro in tax on 1.7bn Euro in sales.

    This is the exact same corporate structure that most major international companies use to reduce their tax bill. Explained pretty clearly here: http://www.irishtimes.com/business/sectors/technology/facebook-paid-1-9m-in-irish-tax-on-1-7bn-turnover-1.1617031

    I’m not singling out Facebook, they’re all at it. This article from the NYT (Apr 2012) gives the bigger picture (Apple pretty much invented this strategy): http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html?_r=0

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