Eddie Mair 4pm - 7pm
Rishi Sunak working with US on new 'Amazon Tax', reports say
7 March 2021, 14:10 | Updated: 7 March 2021, 17:27
Rishi Sunak says he will seek support from UK allies on a new tax for online retail giants, aiming to level the playing field between ailing British high streets and companies like Amazon.
Multiple reports suggest the chancellor has spoken with new US Treasury Secretary Janet Yellen about the possible tax on the companies.
Mr Sunak has said he hopes to make the issue a priority at the G7 summit in Cornwall in June, where he will meet his finance minister counterparts.
"One of my priorities in the G7 this year, which I've already started work on, is to try to get international agreement on a new way to tax these companies," he told The Sun.
"I spend a lot of time talking to my finance minister colleagues around the world about this."
In April 2020 the chancellor implemented a 2 percent digital sales tax on online tech companies, however there are concerns that online retailers just passed the cost onto independent sellers on their platform.
A new attempt to tax the tech giants is likely to gain support from many backbench Conservative MPs, who have argued high street retailers are being stifled by business rates, which online retailers do not pay.
Speaking in the Commons on Thursday, Tory MP Gagan Mohindra called on the Treasury to look at "wholesale reform" of business rates to help protect city centres and high streets.
"Covid-19 has accelerated the change in our working and buying habits," he added.
"I'd urge the Chancellor to grasp this opportunity for tax reform to ensure that all businesses have a level playing field."
However, campaign group TaxWatch claim the chancellor just gave Amazon a major tax break in Wednesday's budget through his "super-deduction scheme", which allows companies to offset 130% of investment spending against their tax bill.
“If expensed at 130%, this would entirely wipe out the pre-tax profits of the company before any deductions of staff pay awards,” said George Turner, TaxWatch’s executive director.
“With the budget announcement suggesting more cuts to government spending in years to come, it is highly questionable as to whether a tax cut for Amazon today is the best use of public money."
The online retailers have seen huge increases in sales during the lockdown, with Amazon reporting a 51 percent increase in UK sales.
Conservative MP Damian Collins told The Telegraph: "The technology giants of Silicon Valley have been amongst the biggest winners during the year of Covid, as we’ve spent more time at home and online.
"Yet these companies often pay far less in tax per pound earned than many businesses on the high street. I believe that the big tech firms could and should be paying more."