Last updated: March 2013
It's time to boycott Amazon
Amazon is stripping away our public services to make our products cheaper
Rob Harrison asks what co-ordinated consumer campaigning could do to drive change in the world of corporate tax avoidance.
There’s nothing like a recession and swingeing public-service cuts to change the public mood on tax avoidance. In the UK in 2012 we’ve had everyone including the Prime Minister, BBC’s Panorama and the Daily Telegraph – all with varying degrees of reluctance – drawn into the debate.
Some more prescient economic commentators have long pointed out that systematic tax avoidance by corporations in a globalised economy is so serious that it stands to undermine the very tax base upon which European welfare states have been built.(1)
But what can ordinary citizens do about it? Organisations campaigning for change rightly point to better regulation – such as a requirement for companies to publish ‘country by country’ tax reporting of the type Norway recently announced it would introduce.
Selective public sector procurement (like our own call for public sector contracts not to go to tax avoiders) is another necessary reform. But we already know that corporate capture of regulators through lobbying and political funding makes regulatory solutions problematic in practice.
Collective action by angry consumers could be an important additional lever for change.
With armies of sharp-suited accountants peddling their insidious tax minimisation schemes everywhere, we know that tax avoidance is endemic across the corporate world. Banks have already been highlighted in Ethical Consumer magazine and elsewhere as particularly complicit. However, banking’s own systemic problems are already being addressed by a wide range of international consumer campaigns.(2)
What singles Amazon out as a consumer-facing tax avoider is not just its size and market power, but the fact that its 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 year. 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.(3)
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.4 The Guardian estimated that the company may haveavoided paying a tax bill of around £100 million in the last three years.
The problem with Amazon’s approach is just as pronounced elsewhere. On May 25th this year, one hundred protesters gathered outside Amazon’s shareholder’s meeting in Seattle calling on Amazon to pay more taxes and treat its workers better.(5)
The world’s largest internet retailer collects sales taxes from only five out of fifty US states, exploiting a court ruling requiring a physical presence in a state for sales to be taxable.(6)
In order to escape this liability Amazon apparently “has a map of the US with each state coloured red, yellow or green. Executives travelling to red states need company permission before entering, in case their actions trigger laws that force Amazon to collect taxes there.”(6)
In 2008, Business Week found that Amazon paid a lower percentage of its profits in tax (around 4%) than 488 of the 500 biggest companies in the USA.(7)
And unsurprisingly, Amazon is not averse to using its profits to campaign against tax liabilities. In 2011, it apparently spent over $5 million collecting signatures to a proposition to amend a new sales tax law in California to its advantage.(8)
What’s the alternative for buying books?
As a researcher I sometimes buy books at a rate of one a week and, over the years, I have become seduced by Amazon’s superb technical delivery. The Amazon marketplace particularly allows me to buy second-hand books (recycled) from social enterprises such as Oxfam Books (ethical), and the books turn up within days (great service). Although I am within a mile of two university libraries, a big city bookshop and public reference library, the ease of access to obscure titles on Amazon is much superior.
Since Amazon’s purchase of Abe Books and The Book Depository, it now has 70% of all UK online book sales. Has it got so big as to make boycotting it too difficult for many? And what about e-books and Kindles?
The first point to make is that, surprisingly perhaps, Amazon’s 2011 regulatory filings show that globally ‘Electronics and other general merchandise’ account for 61% of all its sales.(9)
It is easy to go elsewhere for these and the options are far too many to list here and often just as cheap. For books, US shoppers have a real alternative in Barnes and Noble. In the UK it is less easy, but here is a four-pronged strategy which has been working for the last month or so.
- Support your local bookshop if possible. Phone first to order titles.
- In a reversal of Amazon’s famously unpopular suggestion to browse books first in a high-street bookshop and then buy them cheaper online, it is quite fun to browse for books first on Amazon and then buy them from somewhere more likeable later.
- For online books, Guardian Books, a partnership with book distributor Bertrams, works just as well as Amazon and appears to stock all in-print titles. It is owned by Smiths News which paid a very honest £10.2 million in tax in 2012 on a relatively modest profit of £32 million.10
- Newsfromnowhere.org, a not-for-profit workers co-operative and radical bookshop, also sells online. www.hive.co.uk is an initiative combining online shopping with supporting local book stores. For second-hand books online, betterworldbooks.co.uk offers an interesting social enterprise model.
If all else fails, buying second-hand from Amazon’s marketplace – particularly where the order is not ‘fulfilled by Amazon’ – will minimise the revenue Amazon receives.
“The internet is a freedom tool which we all like to use. But Amazon have diminished it through their dominance and tax avoidance. They have taken a good thing and made it ugly.”
Mark Constantine, Lush co-founder (14)
It is a shame to have to boycott Amazon. Their website has made access to millions of books so much more practical for many, and their innovations around Kindle and indeed the self-publishing model for e-books have drawn praise.(15)
But this is not so good as to be worth abandoning our public welfare systems for. If Amazon can’t be persuaded to pay a fair rate of tax on its profits, and to publish country by country reporting to show that it does so, then this is where we’ve got to. It’s this serious. We think they are a good target for a global boycott, but we need collaboration from others to take it forward effectively. We would therefore like to hear from any groups or individuals who would be interested in joining with or supporting such a coalition.
The time is right to focus on a company whose whole business model appears to be based on not paying its fair share of tax. And an action of this kind will also be food for thought for the many other consumer-facing brands whose tax minimisation strategies have strayed into plainly unreasonable territory.
Either way, next time you’re about to click ‘buy now’ on the Amazon website, just think about the nurse that will be sacked or the school roof that won’t be fixed with the few pence you’re about to save.
If you are interested in being part of a boycott campaign contact us here.
The world’s largest internet retailer’s approach to business has made it few friends over the years.
James Heneage, founder of the former Ottakars book chain, has described Amazon as a dangerous force. “With great market power comes great market responsibility and I don’t get the feeling that the leaders of businesses like Amazon really understand that aspect.”(11)
Tim Waterstone, founder of the UK’s largest surviving bookseller, has described Amazon’s creative tax planning as ‘highly unfair’. “The rest of us pay our taxes. It all somehow fits the pattern of Amazon’s dealing with others over the years; rude, contemptuous, arrogant and subversive would be a standard reaction.”(12)
Penguin Books have accused Amazon of being “predatory” and a “monopolist”, saying it was “concerned that Amazon’s below-cost pricing strategy for certain new release titles would be detrimental to the long term health of the book industry.”(13)
Lush is a company that has chosen not to stock its products on the Amazon website. Searching for Lush however brings up the products of a copycat competitor which Lush believe is a misuse of their company name.
Requests to stop this have not been treated seriously. According to Mark Constantine, Lush co-founder, “It’s difficult to win a legal battle with a tax avoider as their actions give them deeper pockets. What we’ve done is to register the name of ‘Christopher North’ Amazon UK’s MD as a trademark in the category of cosmetics. We’ve plans to launch a product called Christopher North with the benefits going to a tax campaign group like UK Uncut. He’s using our name without our consent, so we’re going to use his."(14)
The ‘blogosphere’ is alive with talk about boycotting Amazon. Members of internet campaigners Avaaz and 38 Degrees have discussed the strategy on their websites. Infoism.co.uk gives a librarian’s perspective and a call to boycott. Contributors to www.mumsnet.com have discussed other places to shop when avoiding Amazon.
1 John Gray (1998) False Dawn. Granta. 2 See e.g Ethical Consumer Special Report on Banks EC 135 March 2012 3 Guardian 4/4/12 Amazon: £7bn sales no UK corporation tax. 4 www.financialsecrecyindex.com/2011results.html 5 The Bookseller 25/5/12 Tax protest disrupts Amazon shareholder meeting. 6 Guardian 4/4/12 How Amazon finds tax loopholes. 7 Quoted in thetruthaboutamazon.com 26/7/12. 8 Amazon’s campaign was unsuccessful. http://autographsforsaledotcom.wordpress.com/2011/09/29/amazon-loses-california-sales-tax-evasion-battle/ 26/7/12 9 Amazon.com, Inc US SEC Form 10K 10 Smiths News Plc Annual Report and Accounts 2011 11 www.guardian.co.uk/business/2012/apr/05/amazon-dangerous-ottakar-james-heneage 12 www.guardian.co.uk/technology/2012/apr/06/tim-waterstone-attacks-amazon-tax-avoidance 13 http://www.thebookseller.com/news/amazon-predatory-penguin-tells-doj.html 14 Phone Interview with Mark Constantine Lush co-founder 26/7/12 15 Guardian 26/4/12 Amazon aren’t destroying publishing they’re re-shaping it