Amazon accused of ‘gaming the system’ on business rates
AMAZON has been accused of “gaming the system” after it emerged the online retail giant paid just £63m in business rates last year, despite raking in £8bn sales in the UK.
About £2m of that bill was generated from its handful of Whole Foods shops, which are all in prime London locations including off Piccadilly and Kensington High Street, according to figures by business rates experts Altus.
The online retailer was finally forced to disclose its rates bill by MPs examining the future of the high street.
In a separate blog post, the company said that “the story of Amazon’s contribution to the UK economy, through jobs, investments and business rate payments, hasn’t always been clear”. It said previous estimates of £38m did not take into account its 100 sites across the UK and Ireland, including its fulfilment centres, London offices, Amazon Lockers and Whole Foods shops.
Amazon’s bill is still seen as unfair by bricks-and-mortar rivals suffering from the rise of online shopping but facing rising fixed property costs in the form of business rates.
In comparison, Tesco paid about £700m in business rates last year while Debenhams and Next faced bills of £80m. John Lewis paid £172m to the Treasury and Marks & Spencer handed over £184m. HMV blamed a “tsunami” of retail challenges when it called in administrators last month. The music retailer said it paid £15m on sales of £277m – meaning £1 in every £18.50 going through the tills went on property taxes.
Paul McGowan, boss of Hilco which owns HMV, took to Twitter to express his frustration: “I rest my case … tax should be levied on income, not location. And business rates is a tax.”
The Booksellers Association, which represents independent bookshops, said Amazon was “gaming the system”.
Meryl Halls, its managing director, said: “The system needs to change, and the Government needs to act to reinvent a rates and taxation system that is now broken beyond repair, anachronistic, no longer fit for purpose – and to act quickly and decisively if we are to avoid seeing the demise of more high street retail businesses, and the longterm jeopardy of all high streets.”
Amazon said: “Online sales are still less than a fifth of total retail sales in the UK, and Amazon is a small percentage of that – perhaps a lot less than some people realise.”
However, recent industry figures have shown the growing shift of shoppers to online, particularly when buying electrical and fashion items.