The world’s richest man – and Britain’s ‘most aggressive’ tax avoider – has increased his fortune by nearly US$24 billion during the pandemic-inflicted year of 2020.
Across the globe, both the shutdown of millions of traditional high-street shops and the lockdown of many millions of people has ignited an unprecedented e-commerce demand. As a result, US billionaire Jeff Bezos has become “US$6.4 billion richer as Amazon stock hits a new record high”, the US business magazine Forbes revealed this week.
Bezos is the CEO of Amazon, owns 11.2 per cent of the stock in this global e-commerce empire, and, as of Tuesday 14 April, was worth US$138 billion according to Forbes. (This figure equals £110.7 billion and means that the wealth of Bezos is approaching the 2019-2020 budget for our entire Department of Health and Social Care, which was set at £140.4 billion.)
As reported by the progressive US online newspaper Common Dreams – which, incidentally, is an excellent publication to check out if you want to follow the current US political and economic turmoil – Amazon stock hit a record close of US$2,283 per share in the US on 14 April.
While Amazon stock value has increased over 20 per cent since the start of 2020, most other US stocks have slumped and US job losses have soared. Destitution is widespread coast to coast in the world’s richest country.
Meanwhile, Amazon says it is in the process of hiring hundreds of thousands of workers in usually non-union workplaces in both the US and UK (and elsewhere). And this means tonnes more Amazon cardboard boxes will be filling up our landfills and more Amazon delivery vans will be scurrying up and down our roads.
Wealthier than anyone else on the planet since 1982
While Bezos is now “wealthier than anyone else on the planet dating back to at least 1982”, very little of his loot will end up boosting UK state tax coffers in the midst of our current economic “downturn”, to understate the issue. For more than a decade, Amazon has been significantly avoiding payment of its fair share of corporation taxes in the UK.
A December 2019 study by the UK transparency campaign Fair Tax Mark found that six US big tech firms – including Amazon, Facebook, Google, Netflix, Apple and Microsoft – have been “aggressively avoiding” the payment of global taxes totalling US$100 billion (£75 billion) over the past decade. Amazon was labelled the worst tax avoidance offender in that study.
Quoting from a newspaper account, “Fair Tax Mark said Amazon’s accounting was so complicated there was ‘no way to discern’ how much tax Amazon should be paying or is paying in the UK” and that “Amazon’s two UK subsidiaries – Amazon UK Services and Amazon Web Services UK – had combined tax bills of only £83 million over the decade, as the bulk of sales are booked via Luxembourg. Amazon UK Services arm paid £14 million in corporation tax last year.”
That amount is much lower than expected and a September 2019 report was equally damning of Amazon’s tax avoidance.
Amazon taxes: “The square root of diddly-squat”
Richard Murphy, a professor of practice in international political economy and a well-known UK tax justice expert, said Amazon was not providing taxation officials with “enough information “to provide context for the amount actually owed. As for the UK taxes paid by Amazon UK Services, Murphy said: “There is clearly an underpayment to explain… its payment is the square root of diddly-squat”.
Amazon claims it has been doing nothing wrong in its tax affairs.
Tax avoidance – which is different from tax evasion, a criminal offense – operates in many ways, from lobbying Whitehall to create new tax exemptions, to hiring teams of tax accountants and declaring profits via offshore operations to funnelling funds via tax havens. If new Tory Chancellor Sunak is looking for new sources of funds to kick-start the stricken economy, the City of London is just down the road from Westminster.
Tax avoidance by firms such as Amazon has been so embarrassing that even The Times – no one’s idea of a left-wing newspaper – published an editorial this week calling out attempts by Big Tech to avoid paying a digital services tax that will cut down on so-called “profit sharing” aboard.
More breathing space needed
On Tuesday – and before these latest revelations about Amazon and Bezos were known – The Times wrote: “In times of crisis countries rely on the collective effort of citizens and businesses to pull them through. That makes an attempt by technology giants to exploit the pandemic to avoid paying tax particularly distasteful. A lobby group representing companies including Facebook, Google, Apple and Amazon has called on the government to “look again” at a new tax on digital services in the context of the coronavirus. TechUK has asked that companies be given “more breathing space” before the tax is brought in given the “uncertainty” created by the pandemic.”
Very little concern, of course, for the lack of breathing space for Brits locked down – likely for at least three more weeks – in their living units which studies have shown are the smallest in all of Europe.
Bernie Sanders, the democratic socialist US senator who has just dropped out of the country’s presidential race, tweeted the Forbes story on Wednesday, commenting that “our society cannot sustain itself when so few have so much, while so many have so little.”
During the Covid-19 pandemic, US unemployment claims have skyrocketed to 16.8 million which, as one economist pointed out “is a mind-boggling 2,500 per cent increase over the pre-virus period”. In the UK between 16 March – when the pandemic lockdown here began – and 31 March, nearly one million people have applied for universal credit. In a so-called “normal” two-week period, there are usually about 100,000 claims submitted.
Alan Story of Sheffield is a regular correspondent for Green World.