There is a real issue of online retail giants generating large revenues from UK customers but paying a much lower proportion of tax than their high street competitors.
Last year Amazon’s UK tax bill fell by 78% despite its UK profits rising by 40%. This disparity can be seen in other non-retail online giants like Google. Google’s accounts show that this year it will pay corporation taxes of £49.3m on UK profits of £202.4m. However Google’s 2017 accounts show that it had revenues of £1.27bn a year in the UK between June 2016 and 2017, up from £1.03bn between 2015 and 2016.
A report commissioned by the European Parliament in 2016 showed that the digital sector was engaged in “aggressive tax avoidance practices”, where companies ascribe as much of their profit as possible to their “headquarters” often based in a jurisdiction with low corporation tax. Tax avoidance and evasion hits Government revenue and undermines society, it makes it harder to properly support schools, invest in infrastructure and properly resource the emergency services that keep us safe.
As part of the Digital, Culture, Media and Sports Select Committee I have cross-examined representatives of major digital companies like Facebook, a process that has highlighted to me, the opaqueness of these businesses and the difficulty of holding them to account financially and legally. I firmly believe their international nature means taxing them properly requires an international response which is why I have challenged the Chancellor on how we going to co-operate with the EU to tackle tax avoidance after Brexit and asked him to support country-by-country reporting of tax, profits and revenues.
At the last General Election the Labour Party published a 17 point plan to crack down on all kinds of tax avoidance which included ensuring no public contracts are given to companies that avoid tax, introducing public tax filings for large corporations and millionaires and to force Overseas Territories to have public registers of owners.
Although the Conservative Government talks about everyone paying their fair share, actions speak louder than words. The tax breaks for big businesses instituted during the Conservative and Liberal Democrat Coalition years will have cost the public £110bn by the end of this Parliament. This is taking place whilst our public services are being starved of funding in the guise of austerity and the public sector workers see their wages plummet in real terms.
This is not good enough. Britain deserves better. We need to stop punishing the small and medium businesses on our high streets and instead focus on those big companies who are exploiting the tax system, cracking down on tax avoidance and making sure everyone pays their fair share. Labour would focus on raising taxes on the top 5% to pay for better investment in our schools, hospitals, local services and police forces.