Monday 14 January 2013

Goodbye HMV (another reason to hate Amazon....)

The demise on HMV has far more to do with tax evasion than it has to do with online shopping. The BBC and other news media effortlessly follow the party line when suggesting that the failure of HMV is simply due to the changing demands of consumers, who are happy to buy online rather than shop. This is a partial truth.

The reason that people buy online is that it is cheaper - not because they prefer to buy on line. The reason it is cheaper to buy DVDs, CDs and Blu-ray from Amazon is not because they provide a better service or because it is all done 'online' - it is because they are not paying their taxes and this government is failing to clamp down on these 'super' tax evaders.

We allow Amazon a taxation get out clause by letting them organise their finances outside of our country. Amazons whole business model appears to be built around tax avoidance as a way of competing on price.

The Guardian ran a series of articles on Amazon’s approach to tax in April this 2012. Evidence showed that the company which sold one in four books in the UK, and generated £7.5bn from sales here in the last three years, did so without attracting any corporation tax on the profits from those sales. But books are not its biggest seller - electronic goods including CDs and DVDs account for 61% of its sales. On all this, Amazon pay a pittance on tax.

This position was engineered by the transfer in 2006 of ownership of the main UK business to the Luxembourg-based company Amazon EU Sarl. Luxembourg is number three on the Tax Justice Network’s list of damaging secrecy jurisdictions. The Guardian estimated that the company may have avoided paying a tax bill of around £100 million in the last three years.

Would HMV have gone bust if its main competitor paid its taxes in full? The answer is no. The closure of this iconic store is more down to the failure of Government to crack down on corporate tax cheats.

I will miss HMV, and day by day, my hatred for the power of companies like Amazon continues to grow. We cannot keep allowing them to wreck our economy whilst they line their shareholders pockets.

1 comment:

  1. I have a few wonderings:

    The first is that I think many folk do buy digital music online.

    The second is that I wonder how much pricing is to do with not paying tax, and is actually, legitimately about the costs of selling online.

    The third "wondering" I have is about the way that HMV, Fopp, Our Price, Virgin Megastores are or were in essence, the killers of a previous high street, filled with independent record shops.

    Don't get me wrong, Amazon should be held to account and boycotted for its stance on tax. And the loss of jobs is a tragedy. But I wonder whether we should first recognise that HMV -(the UK behemoth of the music and retail entertainment industry that has istelf helped to purge Britain of diverse independent retailers) is not without faults.

    Damn the murderer, but don't rally around his accomplice protesting innocence.