This is nonsense on just so many levels:
John Lewis says that it could be put out of business if foreign multinationals such as Amazon are allowed to continue paying tiny amounts of tax in Britain.
But how? We keep being told that taxes are not an imposition on a company, they’re just the righteous amounts they pay to support the society around them. How could that possibly lead to one of them going out of business?
Speaking on Jeff Randall Live on Sky News, Mr Street said that the difference between the taxes paid by his company and Amazon could have severe consequences.
“If you actually improve your business by investing, what that means is you have got less money to invest if you’re giving 27 per cent of your profits to the Exchequer, than … if you’re domiciled in a tax haven and you’ve got much more,” he added.
“So they will out-invest and ultimately out-trade us and that means there will not be the tax base in the UK. So I do think it’s an issue that needs to be examined.”
Err, if you reinvest retained profits then you get capital allowances and the like. So you pretty much end up not paying tax on that portion of profits which you do reinvest.
Or perhaps this isn’t true? Maybe corporate taxation does indeed take a great gouge out of the amount that a company can reinvest, employing more people, expanding the business and the economy? In which case, why are we taxing them in the first place? Are we deliberately trying to reduce investment and employment?
Mr Street said he felt that John Lewis’s customers would also expect “a fair and level playing field” in which both companies were treated in the same way.
But here’s the real killer. Amazon generally doesn’t make much profit anyway. Indeed, it’s their basic business philosophy not to. They generate cash flow, for sure. But they then immediately spend it on expansion of the business: by investing in it.
This not making a profit isn’t all about tax either. We’re not talking about billions piling up in tax havens while reported profits in tax jurisdictions are zilch. The company at group level seemingly deliberately doesn’t make much profit. They just spend everything coming in on expanding the business. There just aren’t profits of any size to tax.
Looking at the 10-K filing in the past 5 years Amazon has made (roughly) half a billion total profits in each year except for year before last when it was a billion. On revenues that are now racing through $45 billion. Globally they make 1%: there just ain’t much profit there to tax, is there?
Because they’re reinvesting it all.
And if they’re just not making much money then the tax they’re paying or not paying on not much money doesn’t amount to a hill of beans, does it?