Booksellers back Hodge on Amazon tax avoidance

Booksellers back Hodge on Amazon tax avoidance

Tim Godfray, chief executive of the Booksellers Association, has backed the stance taken by House of Commons Public Accounts Committee chair Margaret Hodge, who earlier this week accused Amazon of putting UK booksellers out of business by using tax avoidance strategies. 

The m.d.s of retail chains John Lewis and Dixons have also backed Hodge's argument that UK businesses are being put at risk.

Godfray said: "We heartily endorse Margaret Hodge's assertion that Amazon is putting UK booksellers out of business‚ this is irrefutable." He added that the select committee should press the government to ensure that the tax rules were changed so that multinational companies pay fair taxes. "Otherwise our members are put at a very considerable competitive disadvantage," he said.

Nic Bottomley, owner of the Emporium of Reading Delights in Bath, agreed. He said: "If they can't do anything about the tax loopholes, the government can do something about Amazon paying 3% VAT on e-books they sell into the UK, that should be looked at too."
 
At the HoC inquiry into levels of corporation tax paid by Amazon, Google and Starbucks held earlier this week, Amazon's head of public policy Andrew Cecil stated that Amazon operated a single European company, Luxembourg-based Amazon EU S.a.r.L., with Amazon.co.uk operating just as a service company. The inquiry established, however, that Amazon has 500 employees in Luxembourg but 15,000 in the UK. The Bookseller investigation found that Amazon.co.uk generated sales of anywhere between £2.4bn and £3.2bn in 2010. But because the company is owned in Luxembourg, that is where the sales are recorded and tax levied accordingly. Amazon EU S.a.r.L. declared just £4.4m by way of a tax charge for 2010, in the UK it paid just £1.8m.
 
Foyles chief executive Sam Husain said he felt the criteria for paying taxes should be the place where a business essentially operates. He said: "The end user/customer may appear to be getting a better price initially but loses out eventfully as the taxes, particularly in a country such as England, help finance health, pension and other welfare benefits."
Emma Milne-White, owner of Hungerford Bookshop, said: "I think the law has to change, as an independent bookseller, I have to pay £6,000 to £8,000 in corporation tax a year and sometimes it leaves us on the edge, meanwhile, Amazon don't pay theirs and are putting us out of business."
 
However, Richard Mollet, c.e.o. of the Publishers Association, said the onus was on the government to dictate behaviour: "The UK is an open economy and remains broadly free to set its tax rates at whatever levels it sees fit. If these put the economy, or sectors of it, at a competitive disadvantage to our neighbours, the onus is on ministers to make a political decision to change the rates and regime to address that, not on companies to change their behaviour to earn moral approval."
The Bookseller has also learned that a fair tax accreditation scheme is in the process of being designed by Tax Research UK, in which small and medium businesses that pay fair taxes and have transparent financial results can apply for and receive an accreditation for their business and a logo to put on their website. Richard Murphy, director of Tax Research UK, said: "We have gathered quite a lot of support for the scheme, which will be about more than just tax. We will put it together and we will give companies a bad rating if we feel they deserve it."