‘There has to be a level playing field so that… Amazon cannot undercut domestic booksellers by using the tax advantage of booking in Luxembourg a sale to a UK customer that is fulfilled from a UK warehouse.’ I wrote that five years ago: since then, no government anywhere has effectively addressed the issue of global tax minimisation by online giants and multinational consumer brands. As Amazon’s merchandise range has expanded, it has gone on undercutting not just our last surviving bookshops but every other business-rate-burdened local retailer. Meanwhile, as its market capitalisation soars towards $900 billion, its founder Jeff Bezos has become the richest man ever, with a $150 billion hoard.
And now we learn that Amazon paid just £1.7 million in UK corporation tax last year on profits of £72 million in its UK subsidiary; the tax take would have been £4.7 million before the effect of payments into a staff share scheme, but that’s still only a third of what a conventional corporate tax bill might have looked like, and no one seems to know how the trick is done. What’s more, the declared profit derived from just £2 billion of sales through the UK subsidiary — while another £7 billion of sales to UK customers was booked in Luxembourg.
It’s impossible to work out the real profitability of Amazon’s UK business, or the ‘fair’ tax charge that might have applied if it was all visibly onshore. Tax and accounting rules for multinationals are so malleable, and politicians so desperate to encourage inward investment, that Amazon can continue to declare, unchallenged, ‘we pay all the taxes that are required in every country where we operate’. In Luxembourg in particular it benefits (as McDonald’s and others of that ilk have done) from a ‘sweetheart’ deal struck with Jean-Claude Juncker when, as prime minister there before he became European Commission president, he did his utmost to block EU-wide anti-avoidance measures that might have disadvantaged his tiny tax-haven enclave.
So it’s no good trying to shame companies such as Amazon into behaving like good citizens where they operate, because they actually see themselves as citizens of cyberspace whose duty is to maximise shareholder value by exploiting conflicting national tax codes. To which the answer must be either to slash taxes for terrestrial competitors or redouble efforts towards international tax transparency and co-operation, or both. Neither is likely to happen soon, I’m afraid, so we’ll continue fuming at the amoral cunning of Amazon’s tax trickery almost as often as we marvel at its one-click convenience.
Oy, Carney, shut it!
Should Mark Carney keep quiet? When the Governor of the Bank of England told John Humphrys on the Today programme that the possibility of a ‘highly undesirable’ no-deal Brexit had become ‘uncomfortably high’, a dip in the pound gave his detractors (who habitually treat his remarks as a sport akin to clay-pigeon shooting) the opportunity to accuse him not only of doom-mongering but also of making our summer holidays more expensive. Anything affecting UK financial stability is his bailiwick, but he cannot nowadays express an opinion in public without provoking a barrage of Brexiteer abuse — and his exposition of the significance of Thursday’s quarter-point interest rate rise was lost in the fusillade.
If he had stuck to his original five-year contract at the Bank, Carney could have returned to his native Canada two months ago. But he signed on for an extra year to June 2019 and is condemned to spend it regretting the day he shook the hand of George Osborne, perusing the job ads in his airmail copy of the Toronto Globe & Mail, and biting his tongue. I’ve never been a fan — but when I found myself queuing behind him at Pret A Manger in King’s Cross one recent early morning, I actually felt sorry for him.
Without even a bag-carrier to buy his latte, he had the hunched demeanour of one who fears a sudden shout of ‘Oy, Carney!’ across the station concourse. To have been poked in the back by your columnist would have been even worse, so I forbore. But I would have liked to ask whether he has had time to read Unelected Power by Sir Paul Tucker, the Bank’s former deputy governor whose career was shipwrecked by Carney’s arrival. It addresses the thorny issue of when and whether central bankers and other technocrats should opine or keep quiet, and recommends ‘an ethic of self-restraint’ in relation to ‘broader issues confronting their societies’: in other words, stay off Today.
L’argent du beurre
I’m in France, where the heatwave is so fierce that my Dordogne neighbours can no longer summon the energy to berate the Brits about Brexit. But I gather the general view here is that Theresa May is asking for le beurre et l’argent du beurre (to have her cake and eat it), that President Macron was quite right not to offer it to her when she cornered him on the Cote d’Azur last week, and that the EU’s intransigent chief negotiator Michel Barnier is — at least to French ladies of a certain age — a throbbing sexpot.
Meanwhile, you’ll be expecting the tips on where to eat disguised as economic parables that are this column’s August plat du jour. So let me start with Saturday’s marché gourmand nocturne in my holiday village of St Pompon: foie gras, omelettes aux cèpes and rosé wine from the locality, curry from Mauritius, noodles from Vietnam, a multilingual crowd, a golden sunset and never a cross word. A model of frictionless trade in every sense, and happily it will still be here next year.
Mailbox still open
Your dossier of broadband experiences across the UK, destined eventually for the BT chairman’s in-tray, shows a very mixed pattern so far: many customers are unhappy but some are not, and BT is by no means the only villain. The mailbox remains open for another week: email@example.com.
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