Outrage at the low business rates paid by Amazon heaped the pressure on ministers last night to overhaul the broken system.
The online giant was forced to reveal on Tuesday that, despite recording sales of £8.8billion, it paid just £63million in rates. That is far lower than its struggling high street rivals and a much smaller proportion of its income than the bills paid by many small retailers.
The revelation comes as high street shops struggle with soaring rents, shoppers switching to online firms and the worst Christmas sales figures in a decade.
MPs and campaigners said it shows that the business rates system, drawn up before the advent of internet sales, is ruinous for shops and risks killing off ‘the beating heart of communities’.
Amazon pays far lower business rates than its struggling high street rivals and a much smaller proportion of its income than the bills paid by many small retailers
They criticised the Government for putting reform off for almost a decade, and suggested that a tax on sales rather than premises could level the playing field. Amazon was forced by MPs to disclose a rates bill that amounts to only 0.7 per cent of its annual UK sales.
This is far less than Debenhams, which paid £80million in business rates last year on sales of £3billion, or Next, which paid £100million on revenues of £4billion. Amazon was also criticised for paying only £23.5million in corporation tax in 2017. It has been reported that the US internet retailer funnels £2 in every £3 of its UK sales through firms based in Luxembourg.
A Daily Mail campaign to save Britain’s high streets has called for a root and branch inquiry into business rates, for large companies overseas to pay their fair share of tax and for cheaper parking on the high street parking.
Experts warn that 10,000 shops could shut this year. HMV, which went into administration last month saying soaring business rates were partly to blame.
Critics say the playing field is uneven – firms such as Amazon typically rely on massive warehouses in cheap areas, where business rates are far lower
Last night MPs from all parties demanded that ministers overhaul the business rates system.
Labour’s Wes Streeting, a member of the Treasury select committee, said: ‘Some of Britain’s best known retailers have disappeared from our high streets, yet the Government is still clobbering them with business rates while big global giants like Amazon get away with paying peanuts.
‘This isn’t just about consumer choice, it’s about saving the beating heart of communities.’
Tory Bob Blackman, who sits on the housing, communities and local government committee conducting an inquiry into our high streets, said: ‘This demonstrates the need for a change in policy from business rates to a sales tax, levied on items sold rather than premises from where they are sold.’
Labour MP Peter Kyle, a member of the business, energy and industrial strategy committee, said: ‘What has been an anomaly is turning into a crisis. The high street is suffering while giant internet traders are raking in money part at the taxpayers’ expense.’
Liberal Democrat leader Sir Vince Cable said: ‘Business rates are a heavy burden on brick and mortar retailers, while big multinationals find it far too easy to avoid corporation tax. Our broken tax system deserves much of the blame for the struggle businesses face on the high street.’
Amazon paid business rates on 94 buildings, including out-of-town warehouses and offices in London. Most of the bill was taken up by the seven stores in its top-end grocery chain Whole Foods.
Critics say this highlights the uneven playing field – firms such as Amazon typically rely on massive warehouses in cheap areas, where business rates are far lower, while large stores face huge bills for helping to keep high streets alive.
Amazon, which has helped turn founder Jeff Bezos into the world’s richest man, defended its tax contribution yesterday, saying it was ‘proud to have created tens of thousands of good jobs and billions of pounds of investment’.
It said it had invested £9.3billion in the UK economy since 2010 and its corporation tax bill was lower than expected because of massive share awards to employees.
The Treasury has spent £900million on rates relief for small high street firms but retail groups say that is not nearly enough.
Mike Cherry, national chairman of the Federation of Small Businesses, said: ‘The tax system has failed to keep up with modern business or adapt to the rise of digital. It... is simply not fit for purpose.’
Meryl Halls, managing director of the Bookseller’s Association, said business rates allow Amazon to ‘game the system’, adding: ‘Amazon’s in-built advantages are breathtakingly large and systemically ruinous for traditional retailers.’
Kate Nicholls, chief executive of UK Hospitality, said: ‘The current unfair and outdated business rates system is resulting in a bloodbath on our high streets. [It] penalises bricks and mortar businesses.’
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News Pictures Amazon outrage 'shows we MUST reform business rates': MPs pile pressure on ministers
You don’t have to pack away your bikini just because you’re the wrong side of 20. These body-beautiful stars reveal their secrets to staying in shape and prove you can smoulder in a two-piece, whatever your age. Read on and be bikini inspired!
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