The UK government wants an international ‘Amazon Tax’ on online sales

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The Chancellor of the Exchequer, the finance minister for the UK, has indicated that the British government is in favour of an ‘Amazon tax’ and will seek international agreements to secure one to protect ‘traditional’ retail.

You can read his full interview on Sky here but here is one if the things that Hammond says:

We want to ensure that taxation is fair between businesses doing business the traditional way and those doing business online. That requires us to renegotiate international tax treaties because many of the big online businesses are international companies. If we can’t get international agreement to do this we may have to look at temporary tax measures to rebalance the playing field until we can get international agreements.
– Philip Hammond, Chancellor of the Exchequer

Three things immediately jump out from these comments that are revealing. Firstly, is the semantic point that he considers the High Street and purely offline businesses as ‘traditional’ and specifically worthy of protection and preservation. Whilst many of us will be passionate about local High Street firms and local amenities, the threats to them aren’t just from online. Business rates, parking fees and rents are surely more problematic.

Secondly, he doesn’t seem to have a notion of ‘mixed’ companies that trade on and offline most successfully. Indeed, it seems to Tamebay that such ‘mixed’ retail companies should be encouraged because ecommerce sales can insulate a High Street business. Exhibit A: House of Fraser.

And thirdly, perhaps most crucially, he clearly and predominantly considers online retail businesses to be big concerns and multi-nationals rather than small businesses based in Britain. In this move, he is clearly attempting to tap into the protectionist rhetoric that has proved to be persuasive in Australia, where a GST (goods and service tax) is now applied to all goods bought from overseas.

As is also well known these days, more than a half of goods on Amazon are sold by third party (3P) sellers rather than Amazon itself. But an attack on Amazon is also something of an easy shot for headlines in August. And, as Hammond does indicate, the chances of getting an international deal could be time-consuming so merchants shouldn’t be alarmed just yet.

But a unilateral UK tax, that Hammond hits about, could be a threat to British small businesses who sell online. The devil is always the detail and this doesn’t seem to be a substantial proposal just yet by any measure. But even the sniff of the idea is disquieting: would it on all online sales, imports only or specifically against multi-nationals?

It’s hard to imagine that any Tamebay readers would welcome an ‘Amazon tax’ on British online sales. Or maybe you can appreciate the logic? What’s your reaction to Hammond’s suggestion?

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