Already 99,149 people have signed up to the notion that these arrangements are unfair. Higson, author of the Young Bond series of novels, is one of them. \”My position is that Amazon is convenient and cheap, but at the expense of traditional bookshops that have to pay the full tax rate. How can anyone else possibly hope to compete?\” he said. \”There has to be a level playing field. I would be bereft if we lost all our bookshops and all book sales were in the hands of one single retailer that sells books for next to nothing. For a company to barge in, hoover up all sales of everything online and not pay UK tax appears to be bordering on the criminal. And for the government to have let them set up in this way is also bordering on the criminal, it\’s certainly very stupid, but then what do I know about EU tax laws?\”
For it\’s all a combination of two things. Firstly, EU law: it\’s a single market and you get to sell to anywhere in it from anywhere in it.
Secondly, it\’s the way all international taxation works. Use of warehouses and logistics chains does not lead to the creation of a permanent establishment that means liability to corporation tax.
And that\’s it. There isn\’t even any tax dodging, let along avoidance, going on. It\’s not just that this is legal, it\’s that this is the way the system is supposed to work.
So, rather than just sign the petition, Charlie Higson is going to walk the walk and make sure none of his work is ever sold through Amazon… isn’t he?
If the political scum, local and national, stop loading the high street with rates and regulation, then you will have a level playing field. Matters will assume their true form. Perhaps retailers can’t compete and will go down at the hands of internet retail and perhaps they won’t (it is hard to imagine ALL shops being put down by the Inet without a lot help from the state).
I saw a blog yesterday arguing for no cuts in spending and calling for “tax avoidance to be made illegal”. Well, that’s the entire PAYE system f*cked then
“I would be bereft if we lost all our bookshops and all book sales were in the hands of one single retailer that sells books for next to nothing.”
Sorry, he thinks it’s bad that books are cheap? Amazon have made books so cheap that libraries are pretty much redundant.
The tax point is clouding the issue. Online retailing has a different scale of costs. I’ve done work for people who are running online shops after they get home from work, because rather than standing around waiting for customers, a web server is doing that for you. Then there’s the cost difference between storing goods in a warehouse on the edge of Barnsley vs shop locations in Warwick. If Amazon were registered and paying tax here rather than Luxembourg, they’d still be killing these bookshops.
Finally, Amazon actually gives me better service, because the people writing reviews of books on say ASP.NET MVC or jQuery on Amazon have read them, unlike the staff in Waterstones.
“I would be bereft”
I think it’s only fair that we design all policy with an eye to its effect on Charlie Higson.
Here in my little Cotswolds village, and more so in even more remote outposts around the British Isles, Amazon is a godsend, and not just for books.
For me and lots of others, it’s just about convenience and availability, the price makes no difference at all. But for many people, price is absolutely key.
Higson is not one of them.
Being wealthy and under-employed (or time-rich, dependent on your choice of cliche), can spend half an afternoon browsing in Daunts on Charing Cross Road and pay full whack on half a dozen books that catch his eye.
He’s in a minority, here.
Not to mention – and I’m sure this isn’t a major driver – when publishers sell their books into Amazon they usually have to offer a greater discount than when they sell them in to bookstores.
And most publishing contracts, I believe, contain a fairly standard clause reducing the author’s royalties by around 30% when the discount goes above a certain level.
So I would bet a pound to a pinch of snuff, if I can find some, that Highson makes (say)
…Higson makes say 1GBP on a 10GBP book sold via a bookshop and only 70p on the same book sold via Amazon.
But that will not be motivating him, certainly.
But is it really the way the system is supposed to work or is it unintended consequences?
If the former, why weren’t we sending off to Luxembourg for mail order catalogues long before the internet?
And even if we changed all the world’s double tax treaties so that a warehouse was a permanent establishment and so created a liability to corporation tax, we’d still have to allocate a share of group profits to that warehouse on an arms-length basis.
How much does warehousing cost? Not very much. So the proportion of profits being allocated to it – and so taxable here – would be low.
So huge amounts of fuss and admin for minimal tax revenues.
There’s a reason a warehouse isn’t treated as a PE – sensible people drafting double tax treaties decided that it wasn’t worth the hassle.
JamesV (#7),
The Single Market only really got going with the Single European Act in 1993, and took a few years after that to change behaviour.
So internet shopping and the EU single market pretty much grew up together. Coincidence or causation? I don’t know.
So we couldn’t have done mail order shopping from Luxembourg under the EU single market rules before internet shopping, because the single market didn’t really exist then.
Even if Amazon were paying their “fair(sic) share of tax(sic)” it wouldn’t change the fact that they don’t have to pay so many staff, landlords or much in business rates (the latter, IIRC, raising far more for the Treasury than corporation tax).
But Amazon are American and Big and thus Evil.
“For a company to barge in, hoover up all sales of everything online and not pay UK tax appears to be bordering on the criminal.”
I dont think Amazon have barged in anywhere. They invested a lot of time and money in building this system. Its ebooks that are really tipping the book market over but there is no mention of the effects of that in the article.
I’ve spent quite a bit of money on books recently, all of which were downloaded on my Kindle. I’m not sure how a book shop could compete for my custom, sitting as I am in Lagos, no matter what their tax arrangements.
Fuck the local overpriced shops and the councils with their expensive parking lots!
I can browse through umpteen books for the time it takes me to go to the shops, being hassled by the traffic wardens, and told to stand outside when I want to smoke. Fuck them! They got what they asked for!
@Eddy “I dont think Amazon have barged in anywhere. They invested a lot of time and money in building this system.”
Absolutely right. Not to mention, the idiots at Waterstones actually spent the early years of their own internet offer directing online sales to Amazon.
I know Waterstones are, for some people, just a part of the problem, but indie bookshops – outside a few boutique specialists in posh market towns where they own their own premises – are a thing of the past, because there are cheaper and better ways to buy.
It is not my job as a reader to subsidise the jobs of booksellers, sorry as I might be (and I am) for anyone who loses their job and can’t see where another one is coming from.
I’d have felt for the spinners when the Spinning Jenny was invented, but I wouldn’t have agreed with smashing up the Spinning Jennys, or writing whingeing pieces about it in the leftist pamphlets of Blackburn
In regards to ease of shopping, Amazon is to us what Sears-Roebuck catalog was to the 1890’s. We can shop when we want to and from an inventory vastly larger than any store can provide.
“How can anyone else possibly hope to compete?”
anyone? get some warehouse space, set up a website, and find some point in the process where you can make customers happier than amazon. Deliver faster, do better reviews and recommendations, do it cheaper or with more attractive specials. Or do everything the same, but get more exclusives.
You know, the usual way any new business gets into an existing market.
Next!
NielsR,
” get some warehouse space…”etc
It’s probably too late. Not because Amazon are evil monopolists, but “because Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers.” (Matt Yglesias.)
Their profits have just declined, despite rising sales, because they keep cutting their margins.
http://www.slate.com/blogs/moneybox/2013/01/29/amazon_q4_profits_fall_45_percent.html
Luke,
Fair point. The reason Amazon doesn’t pay any tax is because Amazon doesn’t make any money. It’s profit is about 1% of sales which is bugger all. The beneficiary of this is the consumer. And as a consumer I think Amazon are bloody brilliant. Wouldn’t buy shares in them though
@Luke
A leftie friend of mine regularly froths himself silly about Amazon’s ‘immorality’. I’ve pointed out that they don’t pay much tax here because of a mix of the law and a lack of taxable profits, and he then simply says that they are undercutting everyone else in a sinister plan to create a monopoly, and that once they shut everyone else down they will jack their profits up.
I have pointed out that Amazon doesn’t own the internet, or the technical ability to sell online, and that as soon as Amazon’s prices go up someone else will step in and undercut them.
He just says, ‘Ah but they can buy in bulk so they’re cheaper.’
The fact that only the price they sell at is relevant, and that if this gets above the price where a non-bulk buyer can compete with the monopolistic megalith of his imagination the whole thing collapses, escapes him.
I’ve just spent 15 enjoyable minutes reading the comments on the Guardian piece.
I think my favourite is by “ashwinraghu”, replying to JuanFivesix who asked “Do you make your own tax-paying decisions based on your personal morality?”
Ashwin says: “I do, yes. I run a one-man business and I don’t claim reimbursements from the government for many, many things that I legally can claim and get away with (such as my weekday lunch for example).”
Make that man a Hero of the Soviet Union!
@Offshire Observer “Wouldn’t buy shares in them though”
I bought £38,000-worth in 2003. One of the best decision I’ve ever made.
Terrible thing, the free market. Provides what people want, rather than what they should want. Terrible.
Ian B (#21)
Every time I read an article by Toynbee or Murphy (or myriad other Guardian journos) I’m inextricably drawn to what I have read of North Korea – Apparently people are assigned to a given shop (all numbered) for the goods that they can get and are not permitted (unless specially authorized to do so) to buy outside their given area. Sounds like a paradise for the author of this article. Movement between communities is also severely restricted.
Sadly a trip to Pyongyang for both would seem to come to about 7K but I’d be more than willing to chip in to get them to see, first hand, how the system they would implement in the UK would work in practice, and run by people, whom their neighbours in the South prove, have a far greater degree of intelligence and possessed of a culture which seems to encourage hard work far more than the UK has….
Could we send them one way for half that?
Interested (#23)
I once suggested that given we have Diplomatic relations with North Korea, Cuba, Venezuela and suchlike, that The likes of Murphy would be able to evade the confiscatory ‘Socialist Tax’ I was positing (along the lines of the Levies on the Privatised Utilities and Bankers bonuses enacted between 97 and 2010 – it would have been automatic confiscation of 70% of all assets for all Guardian and Daily Mirror Journos, for starters) by getting on a plane to these countries and accepting permanent exile, so I like your train of thought….
Well if EU law leads to cheaper books, I’m all for it. Hoorah for the EU.
Unfortunately, in this case, it is the pre-existing double taxation treaty between the UK and Luxembourg that makes most of the difference.
Of course, if we weren’t in the EU we could be stupid enough to erect trade barriers to protect the ‘traditional British bookshop’ …
Offshore observer, you wouldn’t buy shares in a company that doubled in size between 2009 and 2011? That has experienced massive growth because of reinvestment?
Buy shares in a billion dollar company, you’d not be happy when its a 48 billion dollar company?