Online retailers face special 'Amazon tax' on pandemic profits

Amazon's sales reached £19billion in 2020 after a 51 per cent increase

The UK government is reportedly considering a sales tax for online retailers to help it pay back its debts after extensive borrowing during the Covid-19 pandemic.

The Times claims to have seen leaked emails suggesting that the Treasury officials discussed the proposed sales tax with the chiefs of major online technology companies and retailers in a meeting held earlier this month.

The Treasury is said to be considering the new tax as part of a business rates review, after a consultation held last year.

According to The Times, Chancellor Rishi Sunak is also looking at introducing an "excessive profits tax" on companies, like Amazon, that made huge profits during the pandemic.

Amazon sales in the UK surged by 51 per cent, to about £20bn last year, as lockdown forced people to stay at home and order items online. Food delivery firms such as Deliveroo and many online clothes retailers also saw their profits surge during various lockdowns over the past nine months.

So far, the Treasury has spent over £300 billion to support the economy through the pandemic, pushing the national debt above £2 trillion.

"We want to see thriving high streets, which is why we've spent tens of billions of pounds supporting shops throughout the pandemic and are supporting town centres through the changes online shopping brings," a Treasury spokesman said.

Sunak has stated in the past that some online retailers are not paying their fair share of tax, which gives them an unfair advantage over high street rivals.

However, he is not expected to propose the new tax at his upcoming budget speech next month and will likely delay tax hikes until the autumn budget to give the companies more time to recover after the expected relaxation of Covid-19 restrictions in the spring and summer.

Last week, bosses of leading stores in the UK including Tesco wrote a letter to Rishi Sunak, urging him to reform business rates to help them compete with companies like Amazon which often pay very little tax in many of the countries where they make their profits.

In the letter, the retailers insisted that there was a need to "rebalance the tax base" between online and bricks-and-mortar retail, to ensure everyone pays a similar proportion of tax.

They argued that business rates (a tax on commercial property) have grown disproportionately compared to other taxes in past years and that companies like Amazon are paying a lower amount in business rates compared to bricks and mortar retailers.

Amazon's UK sales last year were $26.5 billion (£19.3 billion), up 51 per cent since 2019, according to official figures.

But, researchers at real estate adviser Altus Group estimate that Amazon's overall business rates bill for 2020-2021 is around £71.5 million - just 0.37 per cent of its retail sales.

High street retailers in comparison paid about 2.3 per cent of their annual retail sales in business rates before the pandemic, according to researchers.

The news of a possible double tax blow for Amazon comes at the time when the company recently lost its attempt to delay a milestone unionisation vote at a warehouse in Alabama.

On Friday, the US National Labor Relations Board (NLRB) denied Amazon's motion filed in January to review its earlier decision to hold the milestone vote for workers by mail.

Amazon said it was disappointed, claiming it goes against the firm's goal of getting as many workers as possible to vote in the election and preferring to delayuntil the pandemic subsides.

Amazon workers are pushing for the right to collectively bargain over their working conditions, such as pay, breaks and safety standards.

"Amazon presents a threat to the very fabric of society and the social contract we work to uphold for all working people," the organisers from the Retail, Wholesale and Department Store Union (RWDSU) state on their site 'BAmazonUnion'.

"Corporations like Amazon have built decades of increasingly bold and aggressive attacks on workers' rights that have dramatically eroded union density, harmed working conditions, and lowered the standard of living for many workers. And it's not stopping."

"The RWDSU has always stood against anti-worker and anti-union companies. Our union will not back down until Amazon is held accountable for these and so many more dangerous labor practices."