Thread by @doctorow

Imposing penalties on cheating monopolists is hard and must be done with care, lest the companies turn new rules into a competitive advantage - rules they can afford to follow, but which their smaller customers cannot.

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For many years, Big Tech maintained the fiction that their digital sales were consummated somewhere in Irish-adjacent high seas or possibly in a basement in Lichtenstein and thus sales-tax exempt. This let Amazon sell books for 20% less than its non-cheating UK competitors.

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To fix this, the EU created a rule requiring digital retailers to collect two non-contradictory pieces of personally identifying info on each purchaser (including non-EU customers) to determine where they were for tax purposes.

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This data had to be retained for ten years, and digital retailers had to remit quarterly sales-tax reports and payments to any of the 28 EU member states from which they had collected a single cent.

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I was a Londoner then, running a small digital bookstore selling my own books (craphound.com/shop). This store turned over a couple hundred pounds/quarter, and after the first quarter, I owed £17 in tax. It cost me more than £700 to file the paperwork to pay it.

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Now, there was a way to escape this: all I had to do was stop selling my books and move all my sales to Amazon. Amazon would steal 30% of my money and do my EU paperwork for me. They had whole buildings full of accountants and programmers to automate the process.

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Yes, Amazon finally had to collect sales tax, but many EU sellers smaller than Amazon went bust or were absorbed into Amazon - this was not a punishment for tax-cheating, it was a reward.

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It's happening again. In an effort to get Amazon to pay its share of UK tax (the company paid paid £14.4m tax on UK revenues of £13.7bn in 2019), the British government has enacted a 2% "digital services tax."

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This tax is levied on the fees that Amazon charges the sellers who use its platform (i.e. me, if I'd decided to move my online bookstore to Amazon) (I moved to the USA and didn't have to).

theguardian.com/technology/202…

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The idea is that this will catch Big Tech cheaters without penalising high-street retailers like John Lewis. But Amazon has taken the absolutely predictable step of announcing that it will simply charge 2% more for third-party goods that it sells.

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Here's why that's a big deal: Amazon preys on these sellers. It spies on their sales through its platform to figure out which businesses are worth entering, then it clones their products, sells them below cost, and puts them out of business.

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The EU and the US are both crafting rules to ban this practice, but those rules won't matter if Amazon is REQUIRED to charge 2% extra for every third-party item - this creates a permanent advantage for Amazon, a universal excuse for predatory selling.

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A simpler answer: charge Amazon tax on its earnings where money changes hands, irrespective of accounting fictions that book those earnings in low-Earth orbit or the British Virgin Islands.

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If Amazon can't provide adequate documentation to ascertain where the transaction took place, simply treat 100% of its total global revenue as taxable in the UK.

I bet they'll figure it out.

Then do all the other profit-shifting scammers: Google, Ikea, Apple, Rolex, etc.

eof/