The government is putting together plans for a tax raid on tech companies that have profited from the Covid-19 pandemic.
Amazon is a hot target after the Big Tech giant saw its UK revenues explode in the past year, surging by half to reach £19.5bn, more than half Britain’s defence budget. However, the digital giant only pays a measly £14.5m in corporation tax.
The Treasury has called Amazon and other companies that have benefited from the pandemic such as ASOS, Deliveroo, Ocado, major supermarkets and courier firms in for a meeting next month in advance of the budget.
Downing Street’s policy unit is looking into an “excessive profits tax” that would be applied to companies that have seen their bank accounts swell while hundreds of thousands of British businesses suffer.
The favoured option is thought to be an online sales tax to help level the playing field for the struggling high street, which lies at the forefront of the government’s priorities.
A source told the Times that Chancellor Rishi Sunak “does accept that the way we tax online sales at the moment is killing the high street and something needs to be done on it.”
“A levy smash and grab raid of two per cent could be paid,” suggested Tory MP Duncan Baker,
“Amazon are ever increasing their share with £1 in every £20 spent in retail going to the firm.”
However, the “Amazon tax”, which is set to be bundled together with wider business rate reforms will not be implemented soon, even though it is set to get top billing at the March 3rd budget as the government tries to give businesses as much breathing space as possible until the pandemic becomes less severe. Holding up action is an e-commerce review with the likes of Amazon that’s set to trundle on for some time.
A Treasury spokesperson said: “We want to see thriving high streets, which is why we’ve spent tens of billions of pounds supporting shops throughout the pandemic and are supporting town centres through the changes online shopping brings. Our business rates review call for evidence included questions on whether we should shift the balance between online and physical shops by introducing an online sales tax. We’re considering responses now.”
Sunak will also extend the furlough scheme and in April, he plans to announce new policies to highlight the “benefits of Brexit”.
He is also looking into options to cover the staggering £300bn cost of the Covid crisis, with levies on Big Tech e-commerce a popular option.
A recent poll by Kekst CNC found that 56% of voters want to hit online retailers with higher taxes.
The situation is dire. The demise of Arcadia and Debenhams in recent weeks, which have both seen brands of theirs gobbled up by online-only retailers, ASOS and boohoo, is just the tip of the iceberg.
The pandemic has seen a 14% spike in the number of retailers facing “significant distress”, and even before the Covid crisis, these businesses were struggling. As far back as 2018, Leave.EU chair Arron Banks called for a Big Tech turnover tax.
In total, more than 500,000 UK companies face financial distress.
In their corporate communications, digital giants repeatedly harp on about the positive contribution they want to make to civic society. Paying taxes and would be a good start.