An Amazon tax won’t save shops. Cut rates instead
od save us from people who mean well”, wrote Vikram Seth in his epic, A Suitable Boy. The trouble is, we are governed by largely well-meaning politicians who are convinced that the best expression of their concern for us is the imposition of taxes and regulations. But scratch the surface and it is a rare policy which stands up to scrutiny – either in terms of delivering the desired outcome or ensuring that the positive intended consequences outweigh the negative unintended ones.
The “Amazon Tax”, which has been a long time brewing and appeared back on the agenda last week, is no exception. The dazzling success of online firms such as Amazon and Google juxtaposed with the ailing, if not dying, high street makes such a levy politically expedient, especially as Tories battle the image of being in the pockets of Big Business. Surely nobody can quarrel with the idea of levelling the playing field to allow traditional stores to have a fighting chance of survival in the internet age?
But how have our politicians allowed the playing field to become so intolerably skewed against bricks-and-mortar retail?
The truth is that the rise of online firms is only part of the story behind the demise of the high street. Regulations brought in by generations of politicians have been squeezing businesses for a long time now. Driving restrictions around city centres and parking charges raised to plug holes in local council budgets have affected revenues. Every demand placed by the state on traders, like the minimum wage legislation or the Sunday trading laws (some not without merit), has made it a little harder for the competitors of internet retail.
Then there is the bigger issue of crippling business rates which has long been the bane of every entrepreneur trying to establish a high street presence. In an article in support of an Amazon Tax in this paper last week, Ruth Davidson herself wrote that a retail sector making up 5 per cent of the UK economy now “pays 25 per cent of all business rates, over £7 billion per year.” One might suggest that if our politicians are so keen to see British city and town centres bustling with vibrant, successful stores, perhaps they should consider reducing some of the extraordinary financial burden that the government places on them.
Even ardent small state advocates understand the Treasury has to raise money somehow to maintain and run public services like roads, hospitals and schools. But there is a balance to be struck where immediate financial gain and political kudos are weighed up against the longer term impact of state interference in a particular sector.
Who would really benefit from an Amazon Tax? The Treasury, in the short term, though this may well be at the expense of higher prices for consumers as the cost is passed on to them – another example of an inadvertent negative impact of a well-meaning initiative. But in the long term, a new tax risks cooling down online retail without doing anything to lift the other weights placed on high street traders. As long as business rates and parking charges remain high, trade will continue to decline. The only way to stop that is to undo some of the policies that have brought the sector to its knees. FOLLOW Dia Chakravarty on Twitter @DiaChakravarty;
at telegraph.co.uk/opinion
Ireally thought that after two weeks away I would be able to return to this page with something new to write about. But no. I come back to discover that, as the Prime Minister might put it, nothing has changed. In fact, if anything it has got worse. We are now at the full-blown paranoia stage of the Brexit “negotiation” in which everybody is accusing everybody else of calumny, bad faith and apparently (in the case of the EU Commission) the other side bugging its secret talks. Good grief. The terms of this discourse have gone from obdurate to acrimonious to technically insane.
Maybe then it is time to examine some basic assumptions because when you think of it, this ludicrous situation was probably inherent in the opening premises of the process. So please bear with me while I go back to basics.
Depressing as the present impasse may be, wasn’t it inevitable that we would eventually find ourselves where we now are, when the original positions laid down by the two sides were not simply at odds, but utterly incompatible? In theory, and presupposing that the UK side sincerely intended to accept the result