Propping up the high street

Philip Hammond © Rex Features
Philip Hammond: unhappy with Amazon

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

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.

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”.

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.”