Is Amazon a SINNER or a SAINT?
It has a reputation as a serial tax dodger but bosses claim to prop up the economy. So . . .
WHEN Amazon became the first big firm to move into Doncaster’s flagship business park, politicians welcomed it with open arms.
The former pit town was trying to revive its fortunes with the ambitious scheme, and the arrival of Jeff Bezos’ online shopping behemoth came with the
promise of hundreds of jobs. ‘It kick-started the development and created more jobs in a couple of years than we were expecting in ten,’ says Bill Mordue, the cabinet member for economic development at Labour-run Doncaster Council.
Amazon’s 1.1m sq ft warehouse – the size of 14 football pitches – is just one of many it has built up and down the country in an extraordinary investment spree in recent years. Since the 2016 Brexit referendum, analysis by the Mail shows the company has announced the creation of no less than 14,000 jobs – a distinction that would have surely earned any other company huge kudos.
But Amazon is not just any other company. Set against its decision to plough hundreds of millions of pounds into its UK division are persistent complaints about how much tax it pays, and lingering worries over the working conditions of staff.
Amazon has also become a lighting rod for anger at internet retailers, which critics accuse of hastening the demise of the High Street through unfair competition.
But earlier this month the company hit back, publishing what it says shows its ‘ economic contribution to the UK’.
According to Amazon, it has invested more than £18bn in Britain since 2010. This includes one- off projects such as new warehouses, research centres and offices, as well as what it has paid employees. The total number who work for the business in the UK will reach 29,500 by the end of this year.
Some 20,000 are based outside London, with jobs ranging from stock picking at sites such as the warehouses in Doncaster to developing cutting- edge software and hardware at research and development centres in Cambridge and Edinburgh.
Amazon – founded by Bezos, one of the world’s richest men with a fortune of £93bn – also claims to support around 122,500 jobs linked to its supply chains and another 90,000 through the businesses that use its online marketplace to sell products.
In a further sign it is backing post-Brexit Britain, the company has moved into a new 15- storey office in London.
However, say Amazon’s critics, there is a catch. The tech giant sparked outrage two years ago when it emerged Amazon UK Services – its logistics arm – had increased annual UK sales to close to £2bn but managed to reduce the corporation tax bill from £7.4m to £4.5m.
At the same time, Amazon uses a complicated company structure, which accounting experts have called opaque, and routes its European takings via a parent company based in low-tax Luxembourg.
Then there is anger over the firm’s business rates bill, which is often much less than that of the traditional bricks and mortar chains. This is because it pays far less for its out-of-town warehouses than retailers have to for town centre shops.
Some in retail such as Tesco boss Dave Lewis is calling for business rates to be replaced with a levy on digital sales instead – a clear threat to Amazon.
Critics such as Waterstones boss James Daunt have long claimed the internet business is pushing them out of business by ruthlessly undercutting competitors on price, and benefiting from an uneven playing field which allows it to dodge the burdens shouldered by traditional, UK-based firms.
As part of its effort to shine more light on its business for sceptics, Amazon grouped together the takings of all its British subsidiaries and disclosed that its total tax bill in the UK last year was £220m. That was after sales of £10.9bn and an undisclosed amount of profit.
Amazon declined to break the taxes down, but said the biggest portion of this was made up of employer taxes such as national insurance, followed by business rates, corporation tax and then other levies such as stamp duty.
Its refusal to be completely transparent about its tax bills will likely continue to annoy critics. But what about the benefits it has brought to areas where hundreds of jobs have been created?
In some parts of the country, local authorities are falling over each other to try and attract the tech giant.
‘We certainly welcome the fact it has brought jobs and [business] rates to Doncaster,’ Mordue adds.
He admits, however, that Amazon is also controversial among some locals.
The company has been accused of allowing ‘unsafe’ and ‘appalling’ conditions in some of its warehouses by the GMB union, which claims targets are so tough that workers don’t want to take the time to go to toilet during shifts and that pregnant women have been made to stand for hours on end. It has also made much of the number of ambulance call- outs to Amazon’s warehouses – as well as more than 600 reports that have been made about it to the Health and Safety Executive.
However, others are more positive. Tory councillor Mark Coxshall, the executive board member for planning on Thurrock Council, in Essex, said some 3,000 jobs created in the area by Amazon’s 2m sq ft ‘mega shed’ warehouse had been ‘transformative’. ‘ There are some concerns about their working practices but the company provides good, wellpaid work,’ Coxshall says.
Amazon insists its corporation tax bill is just one part of the picture and that ‘focusing narrowly’ on this doesn’t ‘tell the whole story’. But that is exactly what its critics are likely to continue doing, until it delivers them transparency.