The rent for the Oxford Street branch of House of Fraser is more than Amazon paid in tax last year, Damian Collins claimed.
The chair of the Digital, Culture, Media and Sport committee joined Julia Hartley-Brewer to discuss the Budget and the new tax on large digital compaies.
In April 2020 the UK will introduce the Digital Service tax, aimed at tech giants which earn at least £500 million a year in global revenues.
It’s expected to raise over £400 million a year.
House of Fraser on Oxford Street. Image: Getty
“This is not a tax that’ll affect tech start-ups and tech entrepreneurs,” said Mr Collins.
“We’ve all felt for a long time they don’t pay their fair share of tax - the tax they pay does not reflect the value of their business.
“A really good example of this was when House of Fraser went into administration in the summer - the rent House of Fraser pays just on their store on Oxford Street in London is more than the amount of tax that Amazon pays in the UK. Something’s wrong here.”
talkRADIO approached House of Fraser for comment.
Last year, Amazon paid £4.5 million in tax, despite the fact that its profits had tripled. For comparison, a single-storey retail unit to let on New Bond Street, near the location of House of Fraser’s Oxford Street store, is over £2.3 million a year to rent. House of Fraser occupies several storeys.
'It's about fairness'
A cut in business rates for small retailers will also help update the system, says Mr Collins, as the size of business premises doesn’t necessarily dictate profits.
“For many smaller businesses, the big bill that determines whether or not they can continue is the business rates,” he said.
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“The business rating system was designed for a different sort of economy, where the size of premises you had would determine how much money you make.
“But there’s a man in my constituency who runs a furniture shop in the high street and he’s got a lot of space to show the furniture but his margin is not that big. But the rateable value of the business is quite high because you’ve got a lot of floor space.
“If you’re a tech company, you could be transacting millions of pounds out of a relatively small space, and the amount of tax they pay is small compared to a high street business.
“It’s about fairness and recognising the old system doesn’t reflect the value of business today.”
Early election 'not likely'
On Hartley-Brewer’s suggestion that the largely generous Budget was a sign an election was on the way, Mr Collins said: “I don’t think that’s likely. I don’t think we’d want to see an election before the Brexit process is completed.
“I don’t think there’ll be an election in the next 12 months.”