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Union silence as EU halts plan for online sales tax

29 January 2019

Amazon UK pays a fraction of the business rates shouldered by high-street shopping chains. Photo Scott Lewis (CC BY-SA 2.0).

Shop workers’ union USDAW was one of the many unions that fell tamely in line with the government in 2016 and argued that it was “undoubtedly in the best interests of Usdaw members to vote to remain within the European Union on 23 June”.

Yet now that the government has said EU law will stop one of the key planks in Usdaw’s industrial strategy for retail, the union has fallen uncharacteristically silent.

The strategy called for reform of tax laws to ensure that companies “pay their fair share of tax (i.e. reducing corporation tax avoidance) as well as creating more of a level playing field between online and bricks-and-mortar retailers e.g. online transaction tax or sales tax.”

Speaking last September at a fringe meeting at the Labour Party conference, union leader Paddy Lillis renewed the call: “We need to level the playing field between online and bricks-and-mortar retailers, but we also need to level the playing field for workers.”

EU rules

Last week the Financial Secretary to the Treasury wrote to the House of Commons Treasury select committee saying that there was a “high risk” that such a tax would breach EU rules on state aid – and so the government was abandoning the idea.

Why, after the vote to Leave, is Britain still worried about EU rules? Because under the draft withdrawal agreement negotiated by Theresa May Britain has accepted “dynamic alignment” with Brussels on such rules.

“Dynamic alignment” means that during the transition period any rules introduced by the EU are automatically applied in Britain without any parliamentary scrutiny (so much for parliament being “in control”).

It also seems to mean that the Treasury will second-guess potential EU rulings and not even make an effort to argue its case.

Amazon

Of course, there is no suggestion that the Treasury decision is anything to do with Chancellor Philip Hammond’s cosying up to Amazon, whose UK head played a prominent role in the leaked conference call on Brexit he held this month with business leaders.

Property consultant Altus Group says that Amazon UK paid just £63 million last year in business rates on revenue of £8 billion. By contrast, Debenhams and Next each paid £80 million in business rates last year on UK revenues of £2.3 billion and £4.1 billion respectively.

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