Coverage of politics at Westminster is obsessing about every minor detail of the Brexit discussions, while very little attention is being paid to the Budget, only a few weeks away. What changes do we want to see from the Chancellor of the Exchequer? The challenge he faces is not easy. Actually, the overall financial position of the Exchequer is rather better than we might have expected, (despite the ubiquitous and ridiculous â€˜fearâ€™ predictions emanating from the Treasury before the EU Referendum in 2016). But the recently announced massive annual Â£20 billion increase in NHS investment will have to be paid for. There is also a real need to increase investment in social care and defence.
Where is this extra money to come from? Over recent weeks Iâ€™ve received hundreds of emails calling for an â€˜Amazon Taxâ€™, based on the belief that this would make a difference. Because Amazon is such a massive worldwide business, with a market capitalisation of over Â£1 trillion, thereâ€™s a widespread assumption that paying just Â£4.6 million in Corporation Tax is â€˜cheating the systemâ€™. I also hope that the Chancellor will find a way of extracting more tax out of the several worldwide companies who do not have a High Street presence, but, as always, these internet based campaigns are not what they seem.
Firstly, itâ€™s not Amazon (the worldwide monolith) which is based in the UK – itâ€™s a subsidiary (Amazon UK Services) and itâ€™s run from about a dozen giant warehouses. Its profits in the UK are actually well below Â£100 million, a lot of money but not a base to make any significant boost to Treasury income. Even so, its tax bill still seems lower than it should be. Itâ€™s important to understand why. In 2000 the then Labour Government introduced a scheme to encourage companies wanting to create schemes giving shares to employees. Any company which did this could set the cost against its Corporation Tax liabilities. I approved of this scheme. Still do. Do we really want to stop this? Personally, I think it a great idea to give employees a real stake in the success of the business they work for.
Amazon (and others) are also said to have unfair advantage over other retailers by paying lower business rates. Now itâ€™s true that Amazon has developed a business model which is not based on the High Street, but is located in properties where business rates are more affordable, enabling its prices to be more competitive. It is a very strange campaign, supposedly acting in the interests of the people of the UK which calls for the cost of what we buy to be forced higher.
And finally, I cannot do anything but comment on the bizarre position of the Archbishop of Canterbury, head of the Church of England, publicly criticising Amazon – only for us to discover that the Church has millions of pounds invested in Amazon. And criticising employment practices, which are replicated by the Church. This is as blatant an example of hypocrisy as youâ€™ll ever see! Yes, I hope the Chancellor can find a way to raise more tax from the Amazonâ€™s of our world, but letâ€™s not pretend itâ€™s straightforward or would make any significant difference.