Comment: The real tax villains aren’t overseas retailers

Immoral, manipulative, pathetic. These were only a handful of the insults and accusations thrown by British MPs at some of the largest and (until now) most-respected international businesses operating in this country.

The scenes at this week’s Parliamentary Public Accounts Committee, as Google, Amazon and Starbucks attempted to defend themselves on the amount, or lack, of tax they paid in the UK, are unprecedented.

The committee certainly seemed to catch Amazon by surprise, judging by the performance of director of public policy Andrew Cecil, who seemed wholly unprepared for the level of scrutiny. As a consequence, Amazon did itself no favours. And it was Cecil’s claim he was unable to break out a figure for the etailer’s UK sales that was seized upon as the clearest evidence that the online retailer is manipulating the system.

The anger this issue engenders is indicative of the growing sensitivity about taxation, fuelled by an economic environment where hard-working individuals feel they are shouldering an ever-increasing financial burden. Quite rightly, businesses that leverage the infrastructure paid for by taxes should be contributing proportionally to the public coffers.

But this episode also highlights the dangerous, but increasingly default, position that views big business as the enemy and conveniently ignores the integral role a burgeoning private sector plays in a healthy, democratic economy. And retail attracts more than its share of ire.

UK retailers whose businesses have been affected by the success of Amazon’s model may well have indulged in a spot of schadenfreude this week. But it would be short-sighted not to see the events in this broader context, rather than as an attack on immoral foreign powers.

Amazon hasn’t evaded paying tax and has adhered to UK and EU law. It is not the moral compass of Amazon founder Jeff Bezos that’s broken, but an outdated system.

Does Amazon pay its fair share of tax? Probably not. Is there a level playing field for international and UK-based companies regarding the tax burden? Absolutely not. Is that the fault of the US-based etail giant? No, it is a product of the tax rules we all operate under.

In hauling these companies over the coals rather than the architects of the rules, legislators are not only sending the wrong signals to foreign investors in the UK, but making the classic mistake of attempting to treat the symptoms rather than the cause.