Labour Party proposes raising UK Digital Services Tax (so Amazon can pass the hike on that too?)
- Reference: 1632917830
- News link: https://www.theregister.co.uk/2021/09/29/labour_digital_services_tax/
- Source link:
The proposed increase from 2 to 12 per cent was made on Monday by Shadow Chancellor Rachel Reeves as she addressed the Labour Party Conference in Brighton.
It's party conference season at the moment (the UK's House of Commons is in recess from 23 September to 18 October), so we can expect more such ideas from all sides.
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DST has been in place in the UK since 1 November 2020 in response to widespread tax avoidance by the tech sector. When it was first put in place, Amazon responded by hiking prices for third-party sellers that use its marketplace, claiming it [2]simply couldn't afford to absorb the added cost .
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Just over a week ago, Britain's Prime Minister Boris Johnson [5]met with Amazon CEO Jeff Bezos to talk about – among other things – the firm's scrupulous (legal) tax, er, efficiencies. He [6]didn't make much progress , which isn't surprising.
As for the Labour suggestion, shadow chancellor Reeves singled out the DST as a way to pay for abolishing business rates and helping out struggling small businesses, especially those on the high street.
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She argued the DST should increase to 12 per cent in the next year to "make sure online companies that have thrived during this pandemic are paying their fair share of taxes."
Her crowd-pleasing speech singled out tech giants – particularly Amazon – in an attack that won applause from across the room.
"How can it be when bricks-and-mortar high street businesses are taxed more heavily than online giants?" she asked the conference. "High street businesses pay over a third of business rates, despite making up only 15 per cent of our overall economy.
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"But when Amazon's revenues went up by almost £2bn last year, how much did their tax go up by? Less than 1 per cent."
Referring to Bezos, the firm's founder, Reeves said: "If you can afford to fly to the Moon, you can pay your taxes here on planet Earth."
At the time of writing, no one from Amazon was available to comment on the proposed tax rise, the amount of tax Amazon pays, or the fact that Mr Bezos didn't actually fly to the Moon but [9]made it into space instead .
The Treasury also declined to comment on Reeves' proposals, with an insider telling us that due to the political nature of Labour's conference, it was a matter for Conservative central office.
When asked to comment, a spokesperson for the Tories chortled before politely declining our request.
Thankfully, some of the UK's business leaders were happy to comment even if they were somewhat measured about the proposals.
[10]eBay won't pass UK Digital Service Tax costs on to third-party sellers – unlike Amazon, which simply can't afford it
[11]US slaps tariffs on countries that hit Big Tech with digital services taxes ... then pauses them immediately
[12]It's handbags at dawn: America to hit France with 25% tariffs on luxuries over digital tax on US tech titans
[13]EU wouldn't! Uncle Sam brandishes 'up to 100%' tariffs over France's Digital Services Tax
[14]I've got way too much cash, thinks Jeff Bezos. Hmmm, pay more tax? Pay staff more? Nah, let's just go into space
[15]Google, Amazon pass on UK Digital Services Tax by hiking ad prices, fees at same rate the government takes
Andrew Goodacre, chief exec of the British Independent Retailers Association, told us: "For a long time, independent retailers have been calling for a 'levelling of the playing field' between physical store owners and the internet giants.
"Labour has proposed a significant increase in the Digital Services Tax, and if all this extra tax was paid, it would allow the removal of business rates.
"However, our fear is that the large companies would simply pass this extra tax on to the suppliers and smaller companies that trade on the platforms, and thus avoid paying any extra tax and avoiding reduced profits."
Instead, he called for the [16]international corporate tax discussed at the G7 meeting , as that would result in more tax being paid to the countries where the sales are made.
Even the British Retail Consortium couldn't get too excited.
"The BRC welcomes innovative thinking on solving a huge problem for retail and supporting investment and future growth," it said. "We look forward to seeing the details from which we can make a proper analysis, particularly regarding the basis and scope of any replacements to rates." ®
Get our [17]Tech Resources
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[2] https://www.theregister.com/2020/08/13/ebay_not_passing_on_digital/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YVSNziaTL50Wq@dkxZokuAAAAEE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
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[5] https://www.theregister.com/2021/09/20/amazon_chairman_meeting_with_uk/
[6] https://www.theguardian.com/commentisfree/2021/sep/26/jeff-bezos-boris-johnson-new-york-jennifer-arcuri-amazon-tax
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YVSNziaTL50Wq@dkxZokuAAAAEE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YVSNziaTL50Wq@dkxZokuAAAAEE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[9] https://www.theregister.com/2021/07/20/new_shepard_crewed_flight/
[10] https://www.theregister.com/2020/08/13/ebay_not_passing_on_digital/
[11] https://www.theregister.com/2021/06/03/us_digital_services_tax_tarrifs/
[12] https://www.theregister.com/2020/07/14/america_france_tariffs/
[13] https://www.theregister.com/2019/12/03/us_threatens_retaliation_in_french_digital_tax_spat/
[14] https://www.theregister.com/2018/05/03/bezos_billions_space/
[15] https://www.theregister.com/2020/09/02/google_passes_on_digital_services/
[16] https://www.theregister.com/2021/06/06/g7_15_percent_tax_on_big_tech_companies/
[17] https://whitepapers.theregister.com/
Re: Ineptitude
Lovely. Overt neo-Nazism.
This will be passed on straight to the consumer
12% DST + VAT.
If this was a Tory proposal, the Labour party would be calling it the "tiktok tax".
More likely Amazon will just increase the fees paid by the 3rd party sellers who use the platform to sell, to cover any increase in the tax. Just like they did when it was initially introduced.
Yes - but that isn't a problem for this particular proposal. The proposal seems to be to eliminate/reduce rates - paid by High Street retailers - by charging a transaction-based tax on online sellers. Yes, Amazon would probably push this on to the sellers but they are the ones competing against the High St shops so that seems fair.
Of course, Amazon's profits should be being fairly taxed as well but that is nothing to do with this proposal. It is the Tories who are being disingenuous by creating a tax they claim is on Amazon but which is really paid by the sellers instead of by their mate Jeff.
The proposal seems to be to eliminate/reduce rates - paid by High Street retailers - by charging a transaction-based tax on online sellers.
How is it going to happen? Is DST going to be ringfenced and funnelled to councils? I highly doubt that council would want to give up their cash cow. It's also unlikely that any yield of DST would give them the same level of funding. Probably we would end up with business rates staying as is, plus the DST that companies like Amazon will easily avoid paying and it will be another burden on small business who sells online and can't afford to pay business rates. Which actually helps big corporations, in the sense that it removes competition.
"Amazon's profits should be being fairly taxed"
And they are. That's the real problem: they don't make big profits, and the far right has successfully established the idea it's some kind of conspiracy. Amazon is set up to do exactly what the tax system intended to encourage. There is no 'tax avoidance', just a very low margin business.
There is an easy way round this
The UK is Amazon's second largest market outside North America after Germany. It is expected on current growth trends to become the largest in two to three years. Simply make it a criminal offence to buy or sell through Amazon and refuse to repeal the law until they pay a fair amount of tax.
Re: until they pay a fair amount of tax.
The system needs to tax them a fair amount. Until that's defined your extortion plan is a non-starter.
The other thing you could do, if you really want to make a difference to Amazon decimating the high street, is get off your arse and go to the shops.
Re: There is an easy way round this
They already pay a fair amount of tax. Exactly what the system intends. The idea they don't is far right propaganda. The main pusher of the idea is a chap called Richard Murphy, who self describes as a 'new Nazi' - he thinks the term 'neo-nazi' is tainted...
The point of business rates is to tax valuable land use.
So if you have a warehouse at the edge of a northern town despatching your orders, you'll pay little business rates.
If you have a shop on a busy high street, you'll pay lots of business rates.
It's fine to disagree with that goal, although why you would I don't know, but it seems those that do either don't understand or pretend not to understand why it exists in the first place.
The point of business rates is to tax valuable land use.
No, the point of business rates is to swell the councils' coffers, so they can then use that money for mates contracts and vanity projects. This money largely gets wasted.
@Disgusted Of Tunbridge Wells
"but it seems those that do either don't understand or pretend not to understand why it exists in the first place."
Likely both. 'We are from the government and we are here to help'.
The point of business rates is to tax valuable land use.
No, it isnt.
Why would anyone want to tax land use? The point of business rates is to make sure that businesses in the local area contribute to the cost of local services, just like householders do.
A good goal but undermined, in today's world, by businesses no longer needing a physical presence in the local area to do business there. So, a tax on online business to replace (fully or partially) business rates seems quite logical.
"The point of business rates is to make sure that businesses in the local area contribute to the cost of local services, just like householders do."
Uhuh, and Tommy Robinson isn't a racist...
That idea is s far right conspiracy theory.
"it seems those that do either don't understand or pretend not to understand why it exists in the first place"
Yes, the far right has to lie. If they admit what they are, they're shunned. But if they can spread vile conspiracy theories about 'elites' not paying taxes...
"It's fine to disagree with that goal, although why you would I don't know"
It's the first step on the road to rebuilding Auschwitz.
I'm confused.
Hitler is for or against business rates?
Just repeal all the bloody tax laws and replace with a simpler set of new ones without the (deliberate) loopholes. Draughting more taxes or increasing the tax that is being avoided does not make it better, it often makes it easier for matey-millionaire obfuscate their accounts to use loopholes.
If you sell it you pay the tax. If you charge to sell it you pay the tax on the charge. Everyone in the "real world" does this are are beaten with an HMRC stick when they don't, why can't the mega internet corporations be treated the same? I think I want to by a nice new broom from Amazon and use it across Government finance controllers ...
It's depressing to see people like you swallow the far right's propaganda. What a load of neo nonsense.
An International Corporation Tax is just not going to happen anytime soon.
So when we are back in the real world, and looking at things from a consumer and societal point of view...
""However, our fear is that the large companies would simply pass this extra tax on to the suppliers and smaller companies that trade on the platforms, and thus avoid paying any extra tax and avoiding reduced profits.""
Well, Amazon avoid it, but the tax is paid somewhere into the government and the cost structures and more equalised between high street and internet.
Right? ... right?
OTOH Amazon deliver in electric vans, one journey, hundreds of houses. Better than hundreds of journeys to the shops in fossil-fuel cars, so the carbon cost saving of internet shopping should also be a factor?
etc
etc
Given it is still trying to get the antisemites and far right conspiracy nutjobs out if the party, Labour would do well to steer clear of this particular load of nonsense.
It's really just begging the question.
ALL taxes are paid by the unfortunate individual at the end of the line. All stages on the route to this individual simply add their notional tax onto the price of the goods or service. There is no exception to this principal. If there was, it would simply be a case of the supplier paying the tax out of his own pocket, with no redress, and that is not going to happen. And as Samuel Clemens (Mark Twain), observed, so long ago, "Taxes are not levied for the benefit of the taxed". Nothing has changed since then. Or will.
Ineptitude
We already have a Diverted Profit Tax that is higher than Corporation Tax and is designed to tackle avoidance by big corporations. Problem is that this tax is rather discretionary, so HMRC would need a nudge to go after Amazon. Given the family connections of current Chancellor to Amazon and Jeff Bezos, this is going to be unlikely in my opinion.
On a side note - it is funny and tragic how Labour can think that even more tax burden is going to help small business. Big corporations have an army of top class accountants and solicitors and probably have people who created the tax rules on call as well, to help them avoid paying. Small business can't afford such help.