Politics

Rishi Sunak goes to WAR on Amazon and big tech – Chancellor to spearhead global efforts

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As he bids to rebuild Britain’s post-Covid economy, the Chancellor hopes to have a global agreement in place by summer. He will used June’s G7 conference in Cornwall to formulate a new plan on tax regulations for tech titans such as Amazon, Google and Facebook. He revealed that much of his time was spent talking to finance ministers around the globe about the issue and that he already has a blueprint underway. It is understood the US is keen to reach an agreement.

Traditional retailers have been hit hard by Covid and lockdown the Treasury is also coming under increasing pressure to reform or abolish “outdated” business rates, which target bricks and mortar businesses.

On March 23, Mr Sunak is set to unveil potentially dozens of new tax measures on to start paying off the mounting coronavirus debt and form a new 10 year tax plan.

In a sign that he will resist further lockdowns because of the massive coronavirus debt, it is understood that he has warned his cabinet colleagues that they need to “look at the costs in the round” before considering imposing more restrictions in the future.

Already he is signalling that desperately needed reforms for social care in England may be delayed because of the lack of cash.

But the big prize for the 40 year old rising star in the UK Government are the tech giants, who, legally, pay a small amount of tax compared to traditional businesses because they can relocate to low tax jurisdictions.

For example, in 2019 Amazon made £13.73 billion profits in Britain but only paid £293 million in tax because its Prime service is based in Luxembourg with a small tax rate.

Lockdown also drove more people online, and last year saw Amazon sales rise by 51 per cent to £19.4 billion.

The Chancellor believes that an international agreement on an online tax between the world’s seven largest economies will allow governments to rake in far more.

He said: “One of my priorities in the G7 this year, which I’ve already started work on, is to try and get international agreement on a new way to tax these companies. I spend a lot of time talking to my finance minister colleagues around the world about this issue.”

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A Treasury source added: “The US has signalled now an openness to engage constructively in the debate and try and reach resolution on it which is really positive.

“The Chancellor has spoken to [US Treasury Secretary] Janet Yellen specifically about this.”

The source added: “Online sales tax is one of the options in the business rates review. And on tax day we will be publishing the summary of the responses to that consultation so you’ll be able to see what people have said to us about that as an option.”

The plans to start forcing the online giants to start paying their fair share of taxes comes as the tech business model is increasingly under the microscope.

Government sources have confirmed that the UK is considering a solution similar to the one imposed by Australia in forcing Google and Facebook to start paying for using other people’s content.

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It is understood that Culture Secretary Oliver Dowden is looking at reforms to the media market and holding cabinet discussions on the issue including on economic competition.

The Treasury is also setting up a digital markets unit to tackle the power of online companies.

Sources close to Mr Sunak have also confirmed that he is warning colleagues over the cost of another lockdown and insisting that they look at “all the costs in the balance”.

This comes amid concerns that a winter lockdown could be on the cards if infections rise again.

There has been speculation that Mr Sunak has been leading efforts behind the scenes both to lift restrictions more quickly and ensure they are not reimposed.

A source close to the Chancellor said: “There’s lots of different costs – the cost of people losing their lives, it’s costing people not getting the treatment they need, it’s costing people getting sick from the coronavirus or something else.

“Then there’s all the other costs that we’re talking about whether it’s kids’ schooling and people’s jobs and their mental health. They’re all costs, they’re all impacts.

“They’re all costs and one just has to look at it all in the round and make what are the right decisions on the balance of all those things.”

While Mr Sunak yesterday confirmed that the government will announce its plans to reform social care in England by the end of this year, there is a suggestion that implementation of those reforms could be delayed, another victim of the financial cost of the pandemic, furlough scheme and lockdown.

A source close to the Chancellor said: “It’s not easy. No one has been able to solve that problem in a couple of decades. We’ll try and do it, but we need to be mindful of that when you think about what are the options for reform, and then how would we pay for that reform as well, none of those options are cheap. So, we need to think through that in the round.”

It is also understood that he is steering away the Treasury from imposing a so-called “wealth tax” on people’s assets and homes or savings to help pay off the coronavirus debt but has not ruled out a raid on pension schemes.

It is understood that he does not believe that there are billions in liquid wealth, money sitting in bank accounts that it’s easy to tax.

But the Chancellor will unveil around 30 documents and consultations as part of the Tax Policies and Consultations Update on March 23 which will include the online sales tax and business rates review as well as new taxes.

The document will be part of a new 10 year tax strategy for the government.

A Treasury spokesperson said: “To allow for more transparency and scrutiny, documents and consultations that would traditionally be published at a Budget will be published on 23 March. This will ensure tax professionals will have a better opportunity to feed into consultations and policy discussions, which will strengthen policy-making.

“None of the announcements will require legislation in the next Finance Bill or have an impact on the government’s finances.”

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