Amazon's tax avoidance can only be solved at EU level

Little-Britainism won't help us here.

The revelation in The Guardian last week that Amazon pays no UK corporation tax has prompted much anguish. How can a company that is the UK's largest online retailer with annual sales in the UK of £3.3bn get away with this? Tim Waterstone, founder of the high street book store chain, weighed in with a column in the same paper bemoaning Amazon's "contemptuous, arrogant and subversive" approach.

Despite all the attention on Amazon's behaviour, few solutions to the Amazon problem have been proposed. It's not as if the multinational is going to easily be shamed into paying more tax, and as Waterstone admits, Amazon is acting within the letter of the law.

The solution is instead to look at how tax systems work within the European Union and – shock horror – solve these issues at EU level.

There is a general consensus in the United Kingdom that being part of the EU's single market is a good thing. It allows a UK bookseller to ship its products to Luxembourg, and a Luxembourg bookseller to ship to the UK. There are no cumbersome tariffs or customs procedures involved in doing this. As consumers we win. Yet as taxpayers we increasingly lose.

The first problem is with Value Added Tax (VAT). Paper books have zero-rate VAT in the UK, while e-books are defined as electronic products and are subject to VAT at 20 per cent. Luxembourg, following the lead of France, has reduced VAT on e-books to three per cent. So Kindle e-books sold by the Luxembourg-headquartered Amazon EU Sarl, have a 17 per cent price advantage over the same publication sold by a UK-based e-book seller, even when bought by a customer residing in the UK.

In 2015 the EU VAT rules are due to change, meaning the country of residence of the purchaser will determine the VAT rate, but in the fast-paced technology sector the next three years are going to be crucial - how many UK-based booksellers are going to even be left by 2015?

The second problem is with corporation tax, both the rate of corporation tax and how you define the profits on which it is levied. Ireland's low 12.5 per cent corporation tax rate is one of the reasons both Google and Apple have their EU headquarters there. However Luxembourg is not an especially low corporation tax regime – its headline rate of 28.59 per cent is higher than the UK's rates. The attraction of Luxembourg for Amazon is instead that the costs that can be offset against income are defined differently. This allows for Amazon to have a lower taxable income if based in Luxembourg rather than in the UK.

The European Commission has realised that this is a problem for more than a decade, having repeatedly attempted to work towards a common consolidated corporate tax base (CCCTB), yet so far to no avail. The idea is that the definition of profits eligible to be taxed in all EU countries would be the same, yet the actual corporation tax rate would continue to vary.

Tax matters at EU level require the unanimous agreement of all EU member states and the UK and Ireland, among others, have refused to be drawn on the corporation tax issue - neither the tax base nor corporation tax rates. British chancellors (both Labour and Conservative) have repeatedly stuck to the line that taxation is a matter of national sovereignty and that further EU-wide rules on corporation tax are unwelcome. Yet as as the Amazon case shows, sticking to a resolutely national position on taxation becomes less and less tenable in a globalised market where electronic as well as physical goods are increasingly traded across borders. 

Perhaps if you are George Osborne and you believe in a destructive race-to-the-bottom on tax rates all of this might be desirable, but it is high time that Labour revisited this issue in opposition. The only alternative to tax competition is tax harmonisation. An EU-wide agreement on the definition of an e-book for VAT purposes, and a commitment to a common consolidated corporate tax base are the very least Ed Balls should be demanding.

An Amazon employee walks the corridors of their warehouse. Credit: Getty

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Interview: Momentum’s vice chair Jackie Walker on unity, antisemitism, and discipline in Labour

The leading pro-Corbyn campaigner sets out her plan for the party.

As Jeremy Corbyn’s supporters celebrate after his second win, Jackie Walker – vice chair of the pro-Corbyn campaign organisation Momentum, a Labour member and an activist – talks about the result and the next steps for Labour’s membership.

Walker is a controversial figure in the party. Her history as a black anti-racism activist and advocate for Palestine, and her Jewish background on both sides of her family, did not keep her from being accused of antisemitism for a February Facebook post about the African slave trade. In May, she was suspended from the Labour party for her comments, only to be reinstated a few weeks later after a meeting of Labour’s National Executive Committee.

Anger was reignited at an event hosted by Momentum that she spoke at during Labour party conference, on whether Labour has an antisemitism problem. Walker said the problem was “exaggerated” by Corbyn’s critics, and used as a “weapon of political mass destruction” by the media. (We spoke to Walker before this debate took place).

After a summer plagued by suspensions of Labour members, accusations of hateful speech on both sides, and calls for civility, Walker discusses what steps need to be taken forward to help bring the party together.

Jeremy Corbyn spoke in his acceptance speech about wiping the slate clean and the need to unite the party. What steps can members from all sides take to unite the party?

I think people have got to stop using antagonistic language with each other, and I think they’ve got to stop looking for ways to undermine the democratic will of the membership. That has now been plainly stated, and that’s even with something like 120,000 members not getting their vote because of the freeze. He has increased his majority – we all need to acknowledge that.

Is there anything that Corbyn’s supporters need to do – or need not to do – to contribute towards unity?

I can’t speak for the whole of Jeremy’s supporters, who are numbered in their hundreds and thousands; I know that in my Labour group, we are always bending over backwards to be friendly and to try and be positive in all of our meetings. So I think we just have to keep on being that – continue trying to win people over by and through our responses.

I was knocking doors for Labour last week in support of a local campaign protesting the planned closure of several doctors’ surgeries – I spoke to a voter on a door who said that they love the Labour party but felt unable to vote for us as long as Corbyn is leader. What should we say to voters like that?

The first thing I do is to ask them why they feel that way; most of the time, what I find is that they’ve been reading the press, which has been rabid about Jeremy Corbyn. In all the research that we and others have done, the British public agree overwhelmingly with the policies espoused by Jeremy Corbyn, so we’ve got to get on the doorstep and start talking about policies. I think that sometimes what happens in constituency Labour party groups is that people are saying “go out there and canvass but don’t mention Jeremy”. I think that we need to do the opposite – we need to go out there and talk about Jeremy and his policies all the time.

Now that Corbyn has a stronger mandate and we’ve had these two programmes on Momentum: Channel 4’s Dispatches and BBC’s Panorama, which were explanations of the group, Momentum’s role will be pivotal. How can Momentum contribute towards party unity and get its membership out on the doorstep?

I think we have to turn our base into an activist base that goes out there and starts campaigning – and doesn’t just campaign during elections but campaigns all the time, outside election time. We have to do the long campaign.

The Corbyn campaign put out a video that was subsequently withdrawn – it had been condemned by the pressure group the Campaign Against Antisemitism, which has filed a disciplinary complaint against him. What are your thoughts on the video?

I find their use of accusations of antisemitism reprehensible – I am an anti-racist campaigner and I think they debase the whole debate around anti-racism and I think they should be ashamed of themselves. There is nothing wrong with that video that anyone could look at it and say this is antisemitic. I would suggest that if people have doubt, they should look at the video and judge for themselves whether it is antisemitic.

There’s been a compliance process over the last several months that’s excluded people from the party for comments on social media. Now that Corbyn is in again, how should compliance change?

One of the issues is that we have gotten Jeremy back in as leader, but control of the NEC is still under question. Until the NEC actually accepts the recommendations of Chakrabati in terms of the workings of disciplinary procedures, then I think we’re going to be forever embroiled in these kinds of convoluted and strange disciplinary processes that no other political party would either have or put up with.

There have been rumours that Corbyn’s opponents will split from the party, or mount another leadership challenge. What do you think they’ll do?

I have absolutely no idea – there are so many permutations about how this game could now be played – and I say game because I think that there are some who are Jeremy’s opponents who kind of see it as a power game. I read a tweet somewhere saying that the purpose of this leadership election – which has damaged Labour hugely – has nothing to do with the idea that actually Owen Smith, his challenger, could have won, but is part of the process to actually undermine Jeremy. I think people like that should really think again about why they’re in the Labour party and what it is they’re doing.

Margaret Corvid is a writer, activist and professional dominatrix living in the south west.