Propping up the high street

The government wants to raise taxes to help retailers. Alex Rankine reports.

Philip Hammond: unhappy with Amazon

Copyright (c) 2018 Shutterstock. No use without permission.

As Amazon grows ever bigger, Britain's high street finds itself in ever more dire straits, says Martin Vander Weyer in The Spectator. Yet the tech giant's advantage is not entirely wholesome. Last year it paid just £1.7m in UK corporation tax on £2bn of UK sales. Another £7bn of sales to UK customers were booked in Luxembourg, where it benefits from a "sweetheart" tax deal.

Advertisement - Article continues below

By contrast, the British state takes £8bn each year in business rates from traditional retailers, with Tesco alone paying £700m per year and Debenhams struggling to service an £80m bill. No one knows for sure quite how "the tax trick is done", but local retailers are paying the price for Amazon's "amoral cunning".

That may now change. Chancellor Philip Hammond says that he is "prepared to consider" temporary tax measures to "rebalance the playing field until we can get international agreements". The European Commission proposed taxing the online turnover of big tech firms in March, but progress has stalled in the face of fierce opposition from smaller member states. With House of Fraser the latest in a growing list of bricks-and-mortar casualties, Hammond reckons a remedy is needed to ensure that "the high street remains resilient".

Don't hate Amazon for its success

There is no doubt that Amazon is an "efficient and innovative business", says The Independent. Even in a world of more equitable taxes, the firm "would probably still grow its sales at the expense of the high street". But those who inveigh against perceived corporate greed are missing the point: "Few companies, or individuals, volunteer to pay more tax than the authorities ask of them." The current "rigged" playing field is the result of "official incompetence an analogue Treasury and HMRC trying to deal with the digital age".

Advertisement - Article continues below

Yet the problem with the British high street "isn't that digital has some unfair advantage, it is that the high street retail experience is awful", says Paul Skeldon on Tamebay, a news site for merchants on internet platforms. Online I can find what I want, at a good price, and have it promptly delivered. Compare that with the "poor service, queues, lack of stock, expensive car-parking" and crowds typical of a classic retail experience. "The onus should be on the high street to match the innovation we've witnessed online."

Yes, business rates are too high and that needs to change. "But trying to tax online into submission to let the high street carry on as it is is a myopic approach and once again show just how out of touch with real life politicians of any stripe are."

Cut taxes before raising new ones

Quite, says Chloe Westley in City AM. Remember that the cheap products made available by digital disruptors make life more affordable for those struggling to get by. "Why would the government want to take that away from people by increasing the tax on these businesses?" It's yet another sign of how the government's strategy which has seen the tax burden approach a 50-year high is misguided. "Instead of punishing the poorest in society by taking even more of their money, the government should be reducing the taxes on high-street shops that cut so deeply into their margins."




How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019

Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019
UK Economy

Mervyn King: why the Covid pandemic is a classic example of radical uncertainty

This week, Merryn talks to ex-governor of the Bank of England Merryn King about the pandemic and how to prepare for a future that is unknowable; the g…
2 Jun 2020
UK Economy

“Stealth” debt jubilees are here – and that’s a very good thing

We may not have had a full-scale debt jubilee, but many Covid relief measures quietly amount to “micro-jubilees”. That’s something to celebrate, says …
1 Jun 2020

Most Popular

UK Economy

What bounce back loans can tell us about how we’ll pay for all this

The government will guarantee emergency "bounce back loans" for small businesses hit by Covid-19. Inevitably, many businesses will default. And there'…
1 Jun 2020

This looks like the biggest opportunity in today’s markets

With low interest rates and constant money-printing, most assets have become expensive. But one major asset class hasn’t. John Stepek explains why com…
2 Jun 2020

These seven charts show exactly why you must own gold today

Covid-19 is accelerating many trends that were already in existence. The rising gold price is one such trend. These seven charts, says Dominic Frisby,…
3 Jun 2020