Leaders: Amazon’s corporation tax avoidance must be curtailed

FOR many years, Alex Salmond has offered an enticing vision as to how, with control of the full panoply of economic powers, Scotland’s economy and people might be powered into a new era of prosperity.

Cut the rate of corporation tax that companies pay, and they will flock in creating many jobs. Amazon, the online retailer, has a better idea. Move in and avoid paying corporation tax.

This, to be fair, is neither the fault of, nor a problem for, Scotland’s First Minister. He certainly welcomed the company when it decided to expand its operations and create a new distribution warehouse at Dunfermline and hundreds of jobs with it. But Mr Salmond can hardly have been aware, as has now been revealed, that despite having sold some £7 billion worth of books and goods in the UK in the last three years, the company pays no corporation tax.

It has been a problem of company law and taxation that has loomed over all governments’ agendas for a long time. Amazon is simply among the first to exploit the opportunity. As readers will know, it is a virtual business. Their shop is on everybody’s PC, iPad or mobile phone. People shop from home and what they buy arrives at home. It is what happens in between which is the interesting bit and which enables Amazon to avoid paying tax.

Payments for orders go to an Amazon business in Luxembourg. Everything that anyone buys is recorded as a transaction in Luxembourg and not wherever that customer might be. As such, the £7bn of UK business is subject to Luxembourg taxes, and not British taxes. It means, for example, that the transaction of someone sitting at home in Dunfermline who buys an e-book from Amazon gets it from Luxembourg where the local VAT rate on e-books is 3 per cent and not the 20 per cent levied on UK-based e-book sellers. Not surprisingly, British vendors of e-books are outraged at this sharply sloping playing field which makes it hard for them to compete.

Consumers may think it is just smart business. They get what they want a lot cheaper, so why should they begrudge Amazon the reward the company gets? The answer is that it is a tax-avoiding dodge that could be taken up by every big retailer. The price advantage that big chains such as Tesco offer could become even sharper if they based their online sales in places such as Luxembourg. This would hit the already hard-pressed local high street, forcing many other businesses to close, as local booksellers have done in the face of online sales. And the taxes on which consumers depend to pay for hospitals and schools would start drying up.

There is a clear case for the UK government to act as it did in the budget with online gambling operations. They moved to places such as Gibraltar to escape paying gambling duties. Chancellor George Osborne put an end to that by levying the taxes at the point of purchase, not at the point of sale. Amazon should surely face similar action.

Black hole of Rangers’ debts hard to fathom

The full depth of the financial hole that Rangers Football Club is in has now been revealed – £134 million and getting deeper by the day. The amount that it owes is staggering – equivalent to more than two years of all earnings by the club in a year when it participated in the European Champions League.

This is not all the doing of discredited purchaser Craig Whyte. Questions have to be asked of former owner Sir David Murray. The club’s annual report for 2010 recorded total debt in June that year as £27.1m. Even discounting the £94m of the current debt is owed to HM Revenue & Customs, something which the then board may not have regarded as a pending debt since it disputed the liability, it still means that since that date the other debt has risen to £40m.

This increase has occurred despite the transfer of various players and a reduction in the wage bill, plus all the other economies which have been made in non-playing staff numbers. What has been going on at Ibrox?

It is tempting to conclude that it is all down to folly of a board which assumed participation in top-flight European football, which could yield £16m in a season, was a right and not a bonus.

The prospective new owners, unless they are cheerfully prepared to dispense with vast sums of money, clearly face a daunting task. They should understand the new bottom line of professional football. All clubs have to learn to live within average means and when the team performs exceptionally well, to treat the money that comes with that as just that – an exceptional income.

Panda performance anxiety no surprise at all

They got acquainted, they got close to each other, they smooched or at least cuffed each other playfully, and then… they went their separate ways. The nation’s hopes that a tiny baby panda would soon be on the way were dashed.

We are not surprised. This unfortunate duo have been hauled halfway round the world, have been gawped at by tens of thousands directly outside their home and by millions more on television and the internet, and fed a not very nice type of bamboo that gave one of them acute indigestion. Finally they got pushed into a little concrete yard and expected to do their conjugal duty. Well, would you under those circumstances?

It was a most curious sort of privacy that Edinburgh Zoo offered them. Regular reports were offered on their state of readiness to perform the most intimate of acts. There were all sorts of stories about, well, how they were being put in the mood. Hidden cameras recorded their every move and made available for television.

We think an alternative strategy is merited. The next time the time may be right for conception, leave the poor pandas alone. Let them wander and get to know each other as they might do in the wild. No regular bulletins. No intimate updates. Let nature take its course.