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11 August 2017

“It’s like groundhog day“: smaller booksellers rail against Amazon’s latest low tax bill

While the online giant's revenues soar, bricks-and-mortar stores fight on.

By Daniel Curtis

When I spoke to independent booksellers last week, their pitch was clear: level the economic playing field, and we’ll compete with and outdo Amazon.

Recent signs for bricks-and-mortar stores have been promising. The managing director of chain Waterstones, James Daunt, recently told the Bookseller that a new fixed pricing structure “in some form or another” would be a “fine thing”.

There are other suggestions too. Lizzie Kremer of David Higham Associates (the agents who represent Owen Jones, Jacqueline Wilson and Stephen Fry among many others) is the vice president of the Association of Author’s Agents. She proposes independent-exclusive special editions “priced at the right level for those sellers and offering content exclusive to them for their customers”.

With topics like this finally being raised, the debate that bricks-and-mortar booksellers have long coveted now looks like it’s starting to happen. But, in the here and now, they still have an economic fight on their hands.

Amazon this week announced that the amount of corporation tax it paid in 2016 halved from £15.8m to £7.4m. This is despite turnover rising from £946m to £1.46bn. Those numbers put Amazon in another universe from most booksellers, who have to struggle with things like rents rising far more rapidly than their still-recovering turnovers.

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In response, booksellers are mobilising. The Booksellers’ Association has launched an emphatic attack, with Giles Clifford, head of corporate affairs, calling Amazon’s annual announcements of its low tax payments “groundhog day”.

Clifford said that the low level of tax “gives Amazon – possessed of a huge market share and all the associated commercial bargaining power that goes with it – a further, substantial, advantage over its competitors in the UK book trade”.

It’s not the only advantage benefiting the internet giant. Amazon’s UK arm has, over the years, been the recipient of generous government grants. In 2012, Amazon paid £2.44m in corporation tax, just less than the £2.5m in grants it received from the Scottish government which enabled it to build a new distribution warehouse in Dunfermline.

Clifford, representing British booksellers as a whole, sees this as a systemic issue, describing shops as “constantly forced to compete with one hand tied behind their backs”.

 “This is an annual reminder that the current system of taxation is out of date and discredited,” he said. “It is simply wrong that the current system is so heavily weighted against bricks-and-mortar retailers, who are paying £2.41 in business rates for every £1 paid in corporation tax.

“We already know that the Waterstones on Bedford High Street is paying 17 times more in business rates than Amazon. This deeply unfair system must end.”

Clifford, who says that the association will be taking the matter to parliament when it reconvenes in September, has described “ensuring a fair market” in bookselling as a “top priority”. But as Amazon’s latest tax bill shows, there are few signs the status quo will change without a fight.