"The only way they can afford to run it is by not paying tax. If they had to behave in a more conventional way, they would struggle."
Elizabeth’s Bookshops: If we didn’t have to pay 10% GST on books (which most other countries do not), avoided 95% of company tax by shifting profits to Luxembourg, paid only $8.00 an hour in wages for 10+ hour shifts, could bypass Australia Post … Yes, then we could give Amazon a run for its money.
“It’s taxes, of course, that pay for the roads on which Amazon’s delivery trucks drive, and the schools in which its employees are educated, and the hospitals in which their babies are born and their arteries are patched up, and in which, one day, they may be nursed in their dying days. Taxes that all its workers pay, and that, it emerged in 2012, it tends not to pay. On UK sales of £4.2bn in 2012, it paid £3.2m in corporation tax. In 2006, it transferred its UK business to Luxembourg and reclassified its UK operation as simply “order fulfilment” business. The Luxembourg office employs 380 people. The UK operation employs 21,000. You do the math.
Brad Stone tells me that tax avoidance is built into the company’s DNA. From the very beginning it has been “constitutionally oriented to securing every possible advantage for its customers, setting the lowest possible prices, taking advantage of every known tax loophole or creating new ones”. It’s something that Mark Constantine, the co-founder of Lush cosmetics, has spent time thinking about. He refuses to sell through Amazon, but it didn’t stop Amazon using the Lush name to direct buyers to its site, where it suggested alternative products they might like.
“It’s a way of bullying businesses to use their services. And we refused. We’ve been in the high court this week to sue them for breach of trademark. It’s cost us half a million pounds so far to defend our business. Most companies just can’t afford that. But we’ve done it because it’s a matter of principle. They keep on forcing your hand and yet they don’t have a viable business model. The only way they can afford to run it is by not paying tax. If they had to behave in a more conventional way, they would struggle.
“It’s a form of piracy capitalism. They rush into people’s countries, they take the money out, and they dump it in some port of convenience. That’s not a business in any traditional sense. It’s an ugly return to a form of exploitative capitalism that we had a century ago and we decided as a society to move on from.”