Margaret Hodge: Amazon Should Be Boycotted For Tax Avoidance

Margaret Hodge, the chair of the public accounts committee, has called on shoppers to boycott Amazon after it was revealed that the online store paid just 0.1% tax last year.

Drawing on the indignation provoked earlier by Starbucks, Hodge advised shoppers to shun Amazon, noting that it paid just £4.2m (€5.1m, $7m) in tax in 2013, despite sales totalling £4.3bn.

Despite employing plenty of staff in its British operation, the Kindle manufacturer books its profits at its tax-exempt headquarters in Luxembourg.

Hodge told the Guardian "It is an outrage and Amazon should pay their fair share of tax. They are making money out of not paying taxes. I no longer use Amazon. We should shop elsewhere. What we demonstrated with Starbucks is the power of the consumer voice."

Large US technology companies have done a good job of grabbing the public's attention because of their egregious tax affairs - something which gets up the nose of European regulators and governments. In fact technology firms are neither more nor less rapacious when it comes to tax than any other large multi-national companies (MNCs). The common tax dodge of making large deductible payments does not require a company to be in a high-tech business: Starbucks buys coffee from a Swiss affiliate, for instance.

MCNs are adept at accounting for their mammoth profits by structuring loans, inter-group payments and dividends between affiliate companies. In the case of Amazon - and many other technology firms that own software licences and patents - its US unit leases and resells its software rights at high prices to its affiliate partners in market counties. These enormous payments are returned as tax deductible royalties, thus minimising the group's tax bill.

Hodge continued: "If you are an Amazon user you get endless emails saying Amazon.co.uk. You then order your goods and you get them delivered by the Royal Mail in parcels stamped with the Queen's head, and they then pretend it's nothing to do with business in the UK. They are damaging British jobs.

"If you are a small bookshop in the high street you can never compete with their prices, because you pay taxes. Even for John Lewis their future is also threatened because they pay their taxes."

Hodge has a very valid point. Our high streets have been decimated by technology companies essentially eating up whole sectors - who remembers travel agents for example? Moreover, most internet companies create relatively few jobs in fact. Technology companies all relocate their margins abroad, disappearing from our GDP and depriving governments from additional revenue that should normally evolve from higher productivity.

Threatening to initiate a boycott of Amazon may tap into the same primal fear that gripped Starbucks, after consumer groups and the British Government castigated it so severely it vowed to start paying £15m extra income tax in the UK.

This was presumably to appease coffee drinkers threatening to vote with their feet. But will consumers do the same with their fingers, especially given Amazon's choke-hold on clicks?