# How good is Amazon



## Blister (16 Oct 2020)

My 10+ year old Bosch 18 Volt battery drill needed some new batteries 
I ordered 2 from / Through Amazon 
They arrived so I charged them both up and of I went , Oh dear power wise they would not pull the skin of a rice pudding 
OK I thought maybe they need a second charge , did that and the result was the same useless 
Booked a return via Amazon , Instantly had a email QR code sent , Put then in a box and headded of to the drop of shop , I was given a recipt , 2 hours later I get a email saying " We have refunded you " Also I was expecting to pay the return postage but NO 

Blimey how good is this for service , I do understand the high street demise but with Amazon opperating like this its no wonder


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## Jelly (16 Oct 2020)

They're phenomenally competent at what they do, can't argue about that...

However, there's a lot of really problematic things about how they run their operations, how they treat business partners and especially how they treat their employees that make me very reticent to purchase from them unless its my only realistic option to get something I need.


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## shed9 (16 Oct 2020)

Have to agree with the comment above, can't fault them for customer service but that comes at a cost which outweighs the convenience for me.


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## Richard_C (16 Oct 2020)

I agree about their business practices, but to some extent if you can treat employees badly and stay within the law, or avoid tax and stay within the law then we need to change the law, Amazon are no worse than many others, just bigger.

A big plus is the way so many things are now available. I re-foamed a pair of lovely old AR speakers that were 40 years old. Technical aside for non speakery people, the 'foams' are the circular soft flexible gaskets that join the cone to the chassis. 10 years ago I doubt I would have been able to find any, certainly not the right size, now a quick search and Amazon deliver them the day after along with the little dust covers that sit in the middle of the driver. So they do add to availability of low demand products.

I too try not to use them, but find myself doing so more and more because of local road changes that make it a pain to get to real shops.

It's good to hear of the prompt refund, for some probably irrational reason I trust Amazon more than I trust Ebay which I use only as last resort.


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## TheUnicorn (16 Oct 2020)

I'd use the high street more if the average retail staff was interested in the product they are selling or the customer they are serving, when 90% of the time the response is just 'if it isn't on the shelf, we haven't got it' it is hard to justify the inevitable higher price than amazon would offer, delivered. When you do find a good shop, with knowledgeable staff, you go back, time and time again, and will pay the extra cost happily for their knowledge and the ability to actually see the quality in your hand before you buy, but far too rare an occurance.


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## Bm101 (16 Oct 2020)

I think changing the thread title to 'how_ convenient_ is Amazon?' might give a more honest appraisal than how good they are. 
I use Amazon because it is convenient not because of their business practices which under any sort of moral spotlight are dubious. Is it moral that Bezos has a net worth of nearly double Elon Musk and Mark Zuckerberg. 
175 BILLION. 
Think about that figure for a minute.
'*People don't have a strong intuitive sense of how much bigger 1 billion is than 1 million. 1 million seconds is about 11 days. 1 billion seconds is about 31.5 years.' *Paul Franz .
If Bezos spent a dollar a second,* every single second of Every. Single. Day. And. Night* it would take him *five thousand five hundred and twelve (and a half!) years to spend his fortune.*
And how much tax does he pay?








Amazon paid £293 million in tax in the UK last year


Calls have grown for MPs to deal with the low tax payments to the UK coffers




www.standard.co.uk





This man has enough money to address world reaching issues and does nothing to make the world a better place, least of all pay his employees a fair cut of the profits.
But I just bought some gear off them yesterday that arrived today. Well handy.


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## transatlantic (16 Oct 2020)

I genuinely don't understand it. 

When you can afford everything beyond your wildest dreams, why still continue to push the boundaries? ...destroying any kind of competition, putting other smaller companies out of business, underpaying your staff ...

I'd like to think that as soon as I made my first 20 million or so, I'd just stop, retire, and live a great life! ... no worries, no stress! ..

If Bezos was to just retire right now, sell up, and have nothing to do with Amazon, ..how much in cash would he actually have though? not saying he still won't be ridicuously rich, but I assume it's a small fraction of that 50 billion?


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## akirk (16 Oct 2020)

I suspect that he is no longer interested in money (perhaps wasn't initially) - the drive for achievement in successful entrepreneurs is often not money related...
He has goals and vision he wants to achieve, and I suspect that finances are irrelevant other than as a tool to allow it to happen


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## Garno (16 Oct 2020)

Bm101 said:


> If Bezos spent a dollar a second,* every single second of Every. Single. Day. And. Night* it would take him *five thousand five hundred and twelve (and a half!) years to spend his fortune.*



Does that include leap years?


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## Phil Pascoe (16 Oct 2020)

I seem to remember reading that Labour MP Margaret Hodge — who chairs the All-Party Parliamentary Group on Responsible Tax - has a family interest in a very large firm that pays very little tax.


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## thetyreman (16 Oct 2020)

I wonder if Bezo will lend me a fiver?


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## artie (16 Oct 2020)

Dos anyone know what he does with his wealth?


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## bjm (16 Oct 2020)

thetyreman said:


> I wonder if Bezo will lend me a fiver?


maybe if you ask nicely 

The juggernaut he created is beyond his control. As a traded company they have a duty to maximise profits for their shareholders. Economics trump Ethics.


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## Trevanion (16 Oct 2020)

artie said:


> Dos anyone know what he does with his wealth?



Investments in space travel and various other things.

Blue Origin - Wikipedia


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## Jelly (16 Oct 2020)

Phil Pascoe said:


> I seem to remember reading that Labour MP Margaret Hodge — who chairs the All-Party Parliamentary Group on Responsible Tax - has a family interest in a very large firm that pays very little tax.


 
There's an irony there for sure, but it's not like that kind of activity isn't rife in any institution comprised of influential (and thus statistically quite likely to be wealthy) members...

Perhaps making it easier for people who would be, you know _actually representative_ to be elected as our representatives in parliament might help... But I suspect news of that will come around the same time I get to watch a flock of Dodo's fly majestically overhead.


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## Bm101 (16 Oct 2020)

bjm said:


> Economics trump Ethics.


There's a sentence. Surprised it made it past the filter.


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## bjm (16 Oct 2020)

Bm101 said:


> There's a sentence. Surprised it made it past the filter.


I did wonder about that!!!


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## pcb1962 (16 Oct 2020)

artie said:


> Dos anyone know what he does with his wealth?


His divorce cost him 38 Billion.
I thought mine was bad


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## Trainee neophyte (16 Oct 2020)

pcb1962 said:


> His divorce cost him 38 Billion.
> I thought mine was bad


If it floats, flies or f***s, cheaper to rent. Said by many many a bitter, twisted ex-yacht owner.


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## DBT85 (16 Oct 2020)

pcb1962 said:


> His divorce cost him 38 Billion.
> I thought mine was bad


She was was also with him before he started the company and instrumental in getting it going.


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## Bm101 (16 Oct 2020)

Garno said:


> Does that include leap years?


Yes. 365 and a quarter days Gary...


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## billw (16 Oct 2020)

You have to remember that much of Bezos' wealth is on paper, quite often people think he could just divvy it up and people could turn it into cash to spend in the economy. OK that *might* be theoretically possible, but it's so far beyond the realms of reality that it's irrelevant.

The guy started Amazon on his own, in his garage. It grew wildly. He's American. America loves winners, hates taxes, and he's a winner who doesn't pay much tax. It's not actually his FAULT he is very rich, it's his REWARD for entrepreneurship. The tax issue is the fault of society and the governments they vote for.

If people shouldn't have as much wealth as him - where would you draw the line? Can't have more than a million? Plenty of pensioners in the UK are millionaires by virtue of their home, and I don't see people with pitchforks at their gates demanding to be given a few bricks and a windowframe. Maybe £10m is the limit? OK that'll work.....until people become worth £10m then they'll just go live somewhere else. What about the whole world hounding rich people until there's equality?

I could go on, but there's no point.


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## billw (16 Oct 2020)

BTW I love Amazon - why would I pay £10 for something in a shop where I have to pay to get the bus, take time out of my day, etc etc, when I can pay £9 and it arrives on my doorstep in 24 hours?


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## Terry - Somerset (16 Oct 2020)

A somewhat philosophical view.

Money is unambiguous - you can (if you want) count it, see it, feel it. It is an objective measure of success. $160bn is always bigger the $150bn.

A little like an athlete - first beats second 0.1 seconds in the 100m dash. One lost, one won. As far as I am concerned they both ran very fast.

Nobody has come up with an objective way to measure public good. Is building fresh water supplies more worthy than building schools in the third world. Aids treatment or mine clearance. Solving food poverty or a working sewage system, etc.

All very worthy but there is no clear donor winner!


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## TheUnicorn (16 Oct 2020)

billw said:


> The tax issue is the fault of society and the governments they vote for.


I agree, legal tax avoidance is just common sense, that said the government should be doing everything they can to take everything they are owed, and they should be looking after the worker's rights


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## DBT85 (16 Oct 2020)

TheUnicorn said:


> I agree, legal tax avoidance is just common sense, that said the government should be doing everything they can to take everything they are owed, and they should be looking after the worker's rights


That would mean taking it from their mates as well.


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## TheUnicorn (16 Oct 2020)

DBT85 said:


> That would mean taking it from their mates as well.


True, but the fault lies with the system and its loopholes


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## DBT85 (16 Oct 2020)

TheUnicorn said:


> True, but the fault lies with the system and its loopholes


Absolutely.


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## Peri (17 Oct 2020)

Amazon - tbh I love the fact I can sit here at 2am in my boxers and spend £150 on rubbish essential items for my shed, that'll get here tomorrow.

My elderly Mother (who lives 50 miles away and doesn't have the internet) phoned me last Sunday morning wondering where to get a pet related item. I ordered it for her while we spoke and she received it _within 10 hours_ - _on a Sunday!_ That's just voodoo.


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## Phil Pascoe (17 Oct 2020)

Often the people who say we should support local shops are the people who have local shops to support. If this subject comes up in the on line press you can virtually guarantee when you read an article or letter saying this the address will be London, Birmingham etc. not somewhere out in the sticks.


billw said:


> BTW I love Amazon - why would I pay £10 for something in a shop where I have to pay to get the bus, take time out of my day, etc etc, when I can pay £9 and it arrives on my doorstep in 24 hours?


Precisely. And that's assuming the item can be found, anyway. The last time I had this conversation I looked at my Amazon history and eight out of the previous ten items bought couldn't have been bought anywhere locally anyway.


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## Trainee neophyte (17 Oct 2020)

The very wealthy pay no tax because the rules allow them to. The people who make the rules answer not to the voters, but to the people who fund their political parties. If you pay millions to support (or bribe, if you prefer) politicians, it would only be because you make more money that way. It's just business. The USA has devolved into a bizarre cesspit of open corruption, but almost all "democracies" work the same way, just less obviously. 

I said "almost all" democracies - but does anyone know of one that isn't manipulated and corrupt? 
Perhaps Iceland? I've never been, so can't really comment.


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## Moriwaki (17 Oct 2020)

Blister said:


> My 10+ year old Bosch 18 Volt battery drill needed some new batteries
> I ordered 2 from / Through Amazon
> They arrived so I charged them both up and of I went , Oh dear power wise they would not pull the skin of a rice pudding
> OK I thought maybe they need a second charge , did that and the result was the same useless
> ...


M


Jelly said:


> They're phenomenally competent at what they do, can't argue about that...
> 
> However, there's a lot of really problematic things about how they run their operations, how they treat business partners and especially how they treat their employees that make me very reticent to purchase from them unless its my only realistic option to get something I need.


i too must agree the negative side of Amazon also makes me look for alternatives


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## TheUnicorn (17 Oct 2020)

Moriwaki said:


> the negative side of Amazon also makes me look for alternatives


I agree, the problem a lot of the time is finding them


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## billw (17 Oct 2020)

Trainee neophyte said:


> I said "almost all" democracies - but does anyone know of one that isn't manipulated and corrupt?
> Perhaps Iceland? I've never been, so can't really comment.



It's not just the democracies either. Pretty much every form of government is corrupt - well I say it's the "form of government" but that's not really true, it's the people that exploit the form of government.


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## MikeJhn (17 Oct 2020)

Most successful companies have dubious practice's built in and most are not driven from the top, or possibly even known about at the top, the financial section of the company would not be doing its job if it did not cut expenditure to the absolute minimum.

I live rurally enough that I have to get in the car to do anything outside the household, even go to the local butcher's, which by the way are award winning, but the pandemic has meant that the Tesco deliveries have given me everything I need, and even if this pandemic pass's I will keep using them, access to my local high street is nigh on impossible with the parking restrictions and cost involved putting the price of whatever I buy up by a considerable amount, I used to buy my suits from an independent trader in Canterbury, they where involved with the local trade association and where aghast at the fact that they where the only independent trader left in Canterbury as all the others had been priced out of their business by the local council putting rents and business rates beyond their means, is it any wonder that most of my shopping is on-line, more convenient, in the most part quicker and nearly all products available.


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## TheUnicorn (17 Oct 2020)

MikeJhn said:


> Most successful companies have dubious practice's built in and most are not driven from the top, or possibly even known about at the top, the financial section of the company would not be doing its job if it did not cut expenditure to the absolute minimum


very true, as shown by the church's unknowing investment in payday loans a few years ago

still in the case of Amazon I'm pretty sure that the dubious practises are well known at the top, but until morality and legality are more closely alligned they will go on


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## Alex H (17 Oct 2020)

How to avoid Amazon: the definitive guide to online shopping – without the retail titan


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## Donald Sinclair (17 Oct 2020)

Blister said:


> My 10+ year old Bosch 18 Volt battery drill needed some new batteries
> I ordered 2 from / Through Amazon
> They arrived so I charged them both up and of I went , Oh dear power wise they would not pull the skin of a rice pudding
> OK I thought maybe they need a second charge , did that and the result was the same useless
> ...



If you have batteries and charger for more recent 18 volt cordless tools (e.g. Bosch or Makita) you could consider adapting your 10+ year old Bosh Battery to hold either a Bosch or Makita battery. 
A similar modification has given my Panasonic circular saw a new lease of life.


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## Cooper (17 Oct 2020)

Donald Sinclair said:


> If you have batteries and charger for more recent 18 volt cordless tools (e.g. Bosch or Makita) you could consider adapting your 10+ year old Bosh Battery to hold either a Bosch or Makita battery.
> A similar modification has given my Panasonic circular saw a new lease of life.


Has anyone done this? I watched a youtube about replacing nicad with Lion but there was such a lot of connecting to a complicated circuit board and spot welding that put it out of my league.


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## Droogs (17 Oct 2020)

you can buy adapter plates for drills etc. here are some examples









Use ANY Battery With ANY Tool – Cordless Tool Battery Adapters


Thanks to CLAY and LARRY for the heads up on this AMAZING product! Using the right battery adapter below will allow you to use virtually any cordless tool with any battery. In the DeWALT 20V platfo…




struggleville.net


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## devonwoody (18 Oct 2020)

At our age the pair of us use Amazon a lot for purchases but I think there is a lot of what I call seconds being supplied to us, but being a prime customer account they do take back our undesired purchases.


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## Phil Pascoe (18 Oct 2020)

We use Amazon Prime a lot. We've never returned anything.


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## Droogs (18 Oct 2020)

That's just greedy Phil


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## artie (18 Oct 2020)

k


Droogs said:


> you can buy adapter plates for drills etc. here are some examples
> 
> 
> 
> ...


Wish I'd been able to get one of those before I dumped old drills because it was as cheap to buy new with batteries.


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## Blister (18 Oct 2020)

Just had a look , Can't see one for my Bosch 18 volt drill


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## shed9 (19 Oct 2020)

billw said:


> BTW I love Amazon - why would I pay £10 for something in a shop where I have to pay to get the bus, take time out of my day, etc etc, when I can pay £9 and it arrives on my doorstep in 24 hours?


Why? Because there are consequences to your purchasing choices beyond what's in it for you? 

I also don't buy into the idea that the tax system is flawed and it's fair game if people want to avoid it because they effectively can. If someone with more-than-enough money avoids paying into the system that supports other human beings within their own social structure, that's morally repugnant and not necessarily the fault of the tax system. Anyone who believes the system needs changing to address that situation as opposed to the individuals then you have some agency in this aspect in your own buying power.


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## Phil Pascoe (19 Oct 2020)

It's a 100% the fault of the tax system (not only ours). If I bought something and the seller said do you want to pay tax on it or not, it's up to you I'd say thank you very much, I won't. Morals don't enter the equation - if it's law pay, if it's not don't. Good luck to you. Anyone is of course free to give the government as much of their own money as they wish if they feel so inclined.


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## shed9 (19 Oct 2020)

Phil Pascoe said:


> It's a 100% the fault of the tax system (not only ours). If I bought something and the seller said do you want to pay tax on it or not, it's up to you I'd say thank you very much, I won't. Morals don't enter the equation - if it's law pay, if it's not don't. Good luck to you. Anyone is of course free to give the government as much of their own money as they wish if they feel so inclined.


Not saying the tax system isn't flawed but that the abuse of loopholes doesn't mean the only way to fix it is to fix the system itself. You will always have loopholes, they will always be found and failing that you will have crime, whatever method people or organisations use to circumnavigate that responsibility those inclined to do it will continue to do so. Clearly the systems needs overhaul but that in itself is dictated by public pressure. If the attitude is 'why pay if you can get away with it' then we kind of deserve the system we have either way.
I don't mind paying tax, I shudder when I see how much of my money goes to the government but I also see the evidence of that tax in education, the NHS and other fundamental services. Choosing not to pay because you found a loophole, regardless of the legality of it is messed up as someone else has to pay your share. Anyone who is happy with that, good luck to you.


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## pcb1962 (19 Oct 2020)

Phil Pascoe said:


> It's a 100% the fault of the tax system (not only ours). * If I bought something and the seller said do you want to pay tax on it or not, it's up to you I'd say thank you very much, I won't.* Morals don't enter the equation - if it's law pay, if it's not don't. Good luck to you. Anyone is of course free to give the government as much of their own money as they wish if they feel so inclined.


But if instead the seller said to you "Should I lie and say that I sold it to you in Luxembourg so that you don't have to pay tax" would you still be happy to say fine, go ahead?


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## Phil Pascoe (19 Oct 2020)

If he can do it legally, yes. It's up to the government to ensure he can't.


shed9 said:


> Not saying the tax system isn't flawed but that the abuse of loopholes doesn't mean the only way to fix it is to fix the system itself. You will always have loopholes...



The U.K. has 17,000 + pages of tax legislation, Hong Kong has 276. Our system is has inbuilt loopholes. If it were very much simpler it would be harder to find them.


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## shed9 (19 Oct 2020)

Phil Pascoe said:


> If he can do it legally, yes. It's up to the government to ensure he can't.
> 
> 
> The U.K. has 17,000 + pages of tax legislation, Hong Kong has 276. Our system is has inbuilt loopholes. If it were very much simpler it would be harder to find them.


I agree with what you're saying, I just suspect they will still find them regardless of how much harder they are to find, the accountants finding them will just get paid more. I would wager the levels of tax avoidance is a relatively global issue irrespective of the quantity of laws.


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## billw (19 Oct 2020)

shed9 said:


> I agree with what you're saying, I just suspect they will still find them regardless of how much harder they are to find, the accountants finding them will just get paid more. I would wager the levels of tax avoidance is a relatively global issue irrespective of the quantity of laws.



You have to declare whether you've found/used any loopholes these days in the UK. It doesn't stop you from doing so but it just means the tax office find out lol


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## billw (19 Oct 2020)

pcb1962 said:


> But if instead the seller said to you "Should I lie and say that I sold it to you in Luxembourg so that you don't have to pay tax" would you still be happy to say fine, go ahead?



Well - they'd still have to pay UK VAT. Corporation tax? Well, yeah they'll benefit but if every company that has an "office" in Luxembourg actually had an office in Luxembourg the country would be one huge office park.


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## billw (19 Oct 2020)

shed9 said:


> Why? Because there are consequences to your purchasing choices beyond what's in it for you?



Well OK morally I guess there are, maybe those choices exist with the same situation of buying from a small business versus a huge chain store? Shouldn't everyone "shop local" where possible?

Thing is I'm just not "morally obliged" to pay more than I can. Amazon are cheapest and can deliver? Great. Sometimes Anmazon don't sell what I need. When I bought my thicknesser recently I simply got it from whatever online tool place had the cheapest price. Maybe the owner eats puppies and I'm funding his habit? I dunno. Decent price, bought it.


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## artie (19 Oct 2020)

I notice talk of loopholes, I'd be interested in a definition.

BTW I do know what you are talking about would just like an official definition.


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## akirk (19 Oct 2020)

shed9 said:


> Not saying the tax system isn't flawed but that the abuse of loopholes doesn't mean the only way to fix it is to fix the system itself. You will always have loopholes, they will always be found and failing that you will have crime, whatever method people or organisations use to circumnavigate that responsibility those inclined to do it will continue to do so. Clearly the systems needs overhaul but that in itself is dictated by public pressure. If the attitude is 'why pay if you can get away with it' then we kind of deserve the system we have either way.
> I don't mind paying tax, I shudder when I see how much of my money goes to the government but I also see the evidence of that tax in education, the NHS and other fundamental services. Choosing not to pay because you found a loophole, regardless of the legality of it is messed up as someone else has to pay your share. Anyone who is happy with that, good luck to you.


Society uses a lot of pejorative language - the concept of loopholes in this context is technically wrong...
Government and its agencies (HMRC etc.) set the rules or law as to who has to pay tax, and what they have to pay...
A 'loophole' is no such thing - it simply implies that those setting the rules made a mistake and someone is legally paying money as defined by the law - but with a result the law makers didn't expect... - so they are not loopholes - they are mistakes by the law makers. The definition of loophole implies an ambiguity - these 'loopholes' are not ambiguities - they are simply occasions where the law makers construct legislation without thinking through the implications, or putting themselves in the shoes of business to work out what business is likely to do...

The very notion that law makers who have the ability to set anything they like as law, make mistakes and then criticise and look to penalise those who simply obey the laws as written is itself hypocritical and morally repugnant. Amazon and equivalent are meticulous about ensuring they obey the law, but of course, like anyone else if given a choice of options and one is more financially beneficial, then they will chose that one...

I am very honest and open about taxes - they are always paid on time and accurately - personally and my businesses... but I see no reason why I would want to go out of the way to find issues with the legislation and choose to do something to pay more?! In fact, if I did do that I could be considered to be in breach of my fiducial duties as a director of the business... so in reality the only technically illegal thing Amazon directors could do would be to find ways of paying more taxes! They could be argued to be in breach of Company Law!

As mentioned above, we have complex tax legislation - if the government simplified it they would probably raise a lot more money...


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## billw (19 Oct 2020)

I see where you're coming from @akirk but the loophole is usually between the spirit of the law and the application.

The issue, as someone mentioned earlier, is the sheer complexity of the tax code at present. It would be nigh on impossible for someone to validate every possible combination of tax rates/allowances/incentives/coverage/exemptions etc - much like when a drug is released to market they don't test it in real life against every other drug available - sometimes it's found that taking two drugs simultaneously has an unexpected side effect even though the intention of both drugs is to make you better.

Same as tax laws - the unexpected side effect being that some smart-arrsed accountant has figured out that if you open a subsidiary in one country, then fund it from another, claim capital allowances and contra them against an intercompany high-interest rate loan secured against future revenue streams from intellectual property that's leased from a group company at peppercorn rent, then hey presto - you pay no tax!


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## billw (19 Oct 2020)

devonwoody said:


> At our age the pair of us use Amazon a lot for purchases but I think there is a lot of what I call seconds being supplied to us, but being a prime customer account they do take back our undesired purchases.



Are you buying things from Amazon themselves? Or from Amazon Marketplace?


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## akirk (19 Oct 2020)

billw said:


> I see where you're coming from @akirk but the loophole is usually between the spirit of the law and the application.
> 
> The issue, as someone mentioned earlier, is the sheer complexity of the tax code at present. It would be nigh on impossible for someone to validate every possible combination of tax rates/allowances/incentives/coverage/exemptions etc - much like when a drug is released to market they don't test it in real life against every other drug available - sometimes it's found that taking two drugs simultaneously has an unexpected side effect even though the intention of both drugs is to make you better.
> 
> Same as tax laws - the unexpected side effect being that some smart-arrsed accountant has figured out that if you open a subsidiary in one country, then fund it from another, claim capital allowances and contra them against an intercompany high-interest rate loan secured against future revenue streams from intellectual property that's leased from a group company at peppercorn rent, then hey presto - you pay no tax!



I get it when people say that, but isn’t it a bit of an excuse? if there is a difference between the spirit of the law and the reality, then simply put, the law makers have messed up!

I object to:
- law makers (who have the power to write any law they want) messing up what they write
- companies observe the law correctly
- law makers complain about the companies doing it legally and somehow make them out to be ‘illegal’ or ‘dodgy’ when basically they got it wrong

it is hypocritical and typical of a society where those in power mess up and are not prepared to take responsibility for their own actions...

vat is a good example of a tax that is fairly simple in its remit and action, and which is generally correctly paid - income tax for online businesses could easily be split to pre and post allowances, ie leave the current situation but also put x% tax on turnover etc... (which is effectively happening now)...

and many many other options which would stop Amazon etc.


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## profchris (19 Oct 2020)

billw said:


> Same as tax laws - the unexpected side effect being that some smart-arrsed accountant has figured out that if you open a subsidiary in one country, then fund it from another, claim capital allowances and contra them against an intercompany high-interest rate loan secured against future revenue streams from intellectual property that's leased from a group company at peppercorn rent, then hey presto - you pay no tax!



Amazon's corporate tax payments aren't an unexpected side effect. They are exactly what nations intended when they agreed the international tax law system. They agreed this because they didn't expect any significant cross border selling to consumers. Oops!

Now the loser countries want to change the system, while the winners want to keep it. The problem is an international political problem, not a tax law problem. Just for example, if the UK changes its tax law the US is likely to withdraw from free trade treaty discussions.

If you want to blame someone, blame the US government. For years a lunatic tax law penalised US companies from repatriating foreign profits, so they set up offshore companies to keep those profits from penal taxation. Then the US changed the law, loved the extra tax, and now don't want to give it up. It's everybody's fault (20 years from the first attempt at tax reform for online and agreement is no nearer), but more the US than anyone else.


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## shed9 (20 Oct 2020)

akirk said:


> Society uses a lot of pejorative language - the concept of loopholes in this context is technically wrong...
> Government and its agencies (HMRC etc.) set the rules or law as to who has to pay tax, and what they have to pay...
> A 'loophole' is no such thing - it simply implies that those setting the rules made a mistake and someone is legally paying money as defined by the law - but with a result the law makers didn't expect... - so they are not loopholes - they are mistakes by the law makers. The definition of loophole implies an ambiguity - these 'loopholes' are not ambiguities - they are simply occasions where the law makers construct legislation without thinking through the implications, or putting themselves in the shoes of business to work out what business is likely to do...



That's just semantics at the end of the day and not fundamental to the overall argument. That whole discussion is moot when we eventually agree on the terms to describe what is happening here. Loopholes are as ambiguous as mistakes when it comes to governmental tax laws. Call it what you want and use whatever language you want to define how it came about or remains, the reality is that the opportunity to do it exists and this is mostly true for most tax systems across the globe.



akirk said:


> The very notion that law makers who have the ability to set anything they like as law, make mistakes and then criticise and look to penalise those who simply obey the laws as written is itself hypocritical and morally repugnant. Amazon and equivalent are meticulous about ensuring they obey the law, but of course, like anyone else if given a choice of options and one is more financially beneficial, then they will chose that one...



Meticulously following the law whilst openly and publicly avoiding tax is still openly and publicly avoiding tax. And no, not everyone takes the more financially beneficial option when it comes to tax, that's where the definition of ethical corporate responsibility comes into play. This aspect doesn't just cover tax, it covers going the extra mile in staff welfare, ecological impacting decisions & carbon reduction, etc. You could argue that this is just the long game in modifying public perception to increase long term profit margins and market share. However, even accepting that as being a simple business choice and not pure ethics or morals it still shoots down the argument that anyone given the choice to not pay tax will take that choice.



akirk said:


> I am very honest and open about taxes - they are always paid on time and accurately - personally and my businesses... but I see no reason why I would want to go out of the way to find issues with the legislation and choose to do something to pay more?! In fact, if I did do that I could be considered to be in breach of my fiducial duties as a director of the business... so in reality the only technically illegal thing Amazon directors could do would be to find ways of paying more taxes! They could be argued to be in breach of Company Law!



I've never said that companies (or people) should seek to pay more taxes, just that they should be paying their share and doing the right thing. Tax avoidance is about paying less than expected and in some cases almost entirely avoiding it. It's not an argument of Amazon Directors being financially due diligent by not actively seeking ways of paying more tax, that's just the counter argument at the other end of the spectrum to dilute the actual premise. Don't conflate paying the correct proportion of tax as paying more tax. Amazon staff rely on the same social services as everyone else which enables those staff to function in society and thus turn up at Amazon every Monday morning. If Amazon and every other business entity or individual choose to avoid that under the guise of being their fiducial duties then that pyramid has a finite lifespan.



akirk said:


> As mentioned above, we have complex tax legislation - if the government simplified it they would probably raise a lot more money...



That's an obvious statement but is probably a different, albeit connected, discussion.


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## Phil Pascoe (20 Oct 2020)

shed9 said:


> ... I've never said that companies (or people) should seek to pay more taxes, just that they should be paying their share ...



I doubt anyone here thinks otherwise, I just don't blame anyone for legally avoiding paying it.


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## shed9 (20 Oct 2020)

Phil Pascoe said:


> I doubt anyone here thinks otherwise, I just don't blame anyone for legally avoiding paying it.


But if everyone legally avoided it, would you feel the same way?


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## akirk (20 Oct 2020)

Phil Pascoe said:


> I doubt anyone here thinks otherwise, I just don't blame anyone for legally avoiding paying it.


correct... why is it Amazon’s job to determine what is a correct or fair level of tax? That is why we as a nation pay MPs and the huge staff at HMRC etc. If they are getting it wrong, and leaving ‘loopholes’ then sack them! Why is it appropriate as a nation to pay out millions in salaries to people who don’t do their job, and who then blame others when they get it wrong!

of course we all want companies to pay a fair amount, but Amazon are being honest in following the law as it is written, the law makers are at best being disingenuous by blaming them for their badly written legislation...


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## Phil Pascoe (20 Oct 2020)

shed9 said:


> But if everyone legally avoided it, would you feel the same way?


The powers that be would be forced to do their jobs properly before that situation arose.


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## artie (20 Oct 2020)

shed9 said:


> But if everyone legally avoided it, would you feel the same way?


I doubt many people pay tax they don't feel they have to.


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## lurker (20 Oct 2020)

When Junker (of EU fame) was prime minister of Luxembourg he did a dodgy deal with the likes of amazon. So U.K. tax folks are hamstrung.
This deal helps corporates to avoid billions in taxes.


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## CornishWoodworker (20 Oct 2020)

Just remember, anything bought from an Amazon Marketplace trader( ie a third party) negates any protection from your credit or debit card provider.
Bought from and supplied by Amazon is covered under the credit card rules. 
Amazon may assist you in any discrepancy with a marketplace trader but credit card / debit card providers are not obliged to.


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## Inoffthered (20 Oct 2020)

The reality of international tax is somewhat different especially if there is any question of manipulation of transfer prices between subsidiary companies in different tax regimes.
I have seen how HMRC here *can* challenge what they claim to be artificial pricing between companies designed to move profits from high tax areas to low tax countries.
If HMRC chooses to ignore this option then it raises even more questions about whether HMRC is fit for purpose as they seem to have adopted a strategy of being strong on the weak and weak on the strong.
(Anyone that has had the misfortune to read some of the HMRC technical manuals will soon realise that they were written by F******s)


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## Droogs (20 Oct 2020)

Business tax should be simple. If I were in power then the tax law would be thus:
You will pay X% on the total amount of income from sales or investment that comes into your company over a period of 12 months that has originated at source or has been kept, in an account in this country. This is regardless of whatever costs you have incurred.
You have chosen to be in business and must accept it's costs. It is up to companies to ensure they are as efficient as possible to minimise cost and not for the public as a whole to subsidise a companies running costs by only taxing their income after those costs are deducted. After all an indiviual is not allowed to deduct all their living expenses from their wages and only be taxed on their disposable income, so why should companies?

That way no one can avoid paying tax as there are no allowances to take advantage of or abuse.


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## artie (20 Oct 2020)

Droogs said:


> After all an indiviual is not allowed to deduct all their living expenses from their wages and only be taxed on their disposable income, so why should companies?


I know it wouldn't be easy to exist on the tax free allowance, but isn't that the theory of it?


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## Droogs (20 Oct 2020)

So all your expenses in a year, every penny you use towards the feeding housing and clothing and transportation of your entire family is less than the allowance. my income for most of the first decade this century due to various factors for most years was less than the personal allowance and if not for the fact that my other half worked as well (and dumpster diving while single before I met her) , we would have starved or frozen to death some time after October in any one of those years. 

You as an individual get a paltry allowance that *does not* cover your costs and *cannot *claim them either but a business can claim every penny it spends regardless on what against their tax liablility. Not fair Not right


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## akirk (20 Oct 2020)

Droogs said:


> ...but a business can claim every penny it spends regardless on what against their tax liablility. Not fair Not right


Not quite accurate  there are many things that a business can't necessarily claim - and complexities on how you claim other things - part of what makes our tax system so complicated... but in principle I agree with your concept that a flat charge would work better - it would also be very easy to play with as a concept for encouraging smaller businesses...

e.g. 
Turnover 1 million
Allowable expenses 500k
tax at 19% on remaining 500k is currently £95k
So, a flat tax at e.g. 10% would catch that company at £100k etc.
to then encourage small businesses you can have allowances as you do for personal tax - first £50k tax free / next £100k at only 5% etc. however you wish...

however - it will have issues...
some business sectors have narrow margins / others only work because of tax-breaks and a number of tax laws are designed to support businesses which are seen to be beneficial for the country as a whole - e.g. R&D tax credits

so, yes, the maths can work to do a flat calculation, but it will have other consequences - some of which could be negative...


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## shed9 (20 Oct 2020)

akirk said:


> correct... why is it Amazon’s job to determine what is a correct or fair level of tax? That is why we as a nation pay MPs and the huge staff at HMRC etc. If they are getting it wrong, and leaving ‘loopholes’ then sack them! Why is it appropriate as a nation to pay out millions in salaries to people who don’t do their job, and who then blame others when they get it wrong!



This isn't a discussion of proportional blame against politicians and the respective government back offices, it's about the initial opening thread of Amazon being good. Avoiding tax and not paying the appropriate levels within their geographical territories is not the definition of a good business. Regardless of how legal it may be, it doesn't make them good and that is evident in the backlash they have experienced and are likely to experience going forward.



akirk said:


> of course we all want companies to pay a fair amount, but Amazon are being honest in following the law as it is written, the law makers are at best being disingenuous by blaming them for their badly written legislation...



Again, Amazon may be legal but honest is not a term I would use in this instance. I find that an odd phrase to use for a company that is the global poster boy for serial tax avoidance.


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## akirk (20 Oct 2020)

shed9 said:


> This isn't a discussion of proportional blame against politicians and the respective government back offices, it's about the initial opening thread of Amazon being good. Avoiding tax and not paying the appropriate levels within their geographical territories is not the definition of a good business. Regardless of how legal it may be, it doesn't make them good and that is evident in the backlash they have experienced and are likely to experience going forward.



Of course it is  they do pay the appropriate levels of tax - they pay what is required, they are not in business to be some moral force or crusade, they are a business whose duty is to their shareholders. So, if the people are not happy with the amount of tax they pay, then the issue must be laid squarely at the feet of those who created the rules - politicians and civil servants - whose duty is to the people. So, who has failed? Not Amazon - they are doing as they should - running a business to make money, whereas the politicians and civil servants are not doing as they should.

It really is quite simple... if society doesn't accept that following the law is correct / morally right / acceptable, then we have chaos - how would any business know how to operate - 'here is a list of rules to operate in the UK' ... 'oh, but we have written them badly, so randomly people might get annoyed with you if you follow them, so please make sure that you follow them to be legal, but only select ones which are of no advantage to you, and which will avoid people being annoyed!' It is like sending the UK out to play cricket but then telling them mid match that they are not allowed to hit the ball over the boundary - yes, it is legal, but you will upset the opposition who are not as good as you!



shed9 said:


> Again, Amazon may be legal but honest is not a term I would use in this instance. I find that an odd phrase to use for a company that is the global poster boy for serial tax avoidance.



Honesty / dishonesty is a black and white state - not a series of grayscales where someone is almost honest  so either Amazon are following the law or they are not - either they are honest, or they are dishonest about those laws...

There does seem to be a UK trend in attacking anyone who is successful as being some how morally wrong / ethically unpure / dishonest / etc. It is really not complicated - the politicians and civil servants have the opportunity to set the landscape / laws - once they have, it is fair game to anyone within those constraints - if and when there are bad laws, then they should be changed... Amazon and others of a similar ilk are only under attack because they are successful...


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## bjm (20 Oct 2020)

shed9 said:


> .....it's about the initial opening thread of Amazon being good........ Regardless of how legal it may be, it doesn't make them good and that is evident in the backlash they have experienced and are likely to experience going forward.


Like it or not, what they have created IS good at what it does - it's a highly efficient platform that feeds the addicted. Nobody is forced to use it though! I'm not defending their actions but none of what they do with their tax affairs is illegal - there's only one remedy to that and our (global) political systems are incapable of dealing with it. I'd like to think there is a backlash but there are too many users who like the convenience (and can you really blame them!) to make an impact.


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## space.dandy (21 Oct 2020)

Droogs said:


> Business tax should be simple.



But, unfortunately, it isn't simple and you have just provided an example of that.



Droogs said:


> If I were in power then the tax law would be thus:
> You will pay X% on the total amount of income from sales or investment that comes into your company over a period of 12 months that has originated at source or has been kept, in an account in this country. This is regardless of whatever costs you have incurred.



Let's take two examples assuming your simple tax rate is 10%:


Last year I paid a local small business to refit my bathroom. The total cost was £12k of which £2k was labour and the rest was materials, fixtures and fittings. Under your taxation system, the fitters would have paid £1.2k in tax, which wipes out the majority of their labour cost. There would have been no profit for the business and the workers would have shared £800 which would then have been subject to personal taxation.
Consider an ex-career politician on the lecture circuit. They are being paid say £20k for an after-dinner speech and their only expenses are travel and accommodation, say £1k. They pay £2k in tax and get to keep the remaining £17k, subject to personal taxation.
Your taxation system unfairly disadvantages the trades and other professions with high materials costs, and is exactly the reason why costs are tax deductible, to create a more level playing field by taxing the business on profits only.

Not only that, your 'simple' system also hinders charitable work. Assume that aunt Mavis has a problem with her plumbing and needs a plumber to come and fix it[1]. It's not a difficult problem, and probably only needs £50 in parts and an hour of time. Now, Mavis is struggling to get by on her meagre pension and John, the local plumber, knows that this will hit her hard, so he decides to take the job for free -- Mavis only needs to pay for parts. Under your taxation system this simple charitable act will cost John £5 in tax when Mavis pays him £50 for the parts.



Droogs said:


> You have chosen to be in business and must accept it's costs. It is up to companies to ensure they are as efficient as possible to minimise cost and not for the public as a whole to subsidise a companies running costs by only taxing their income after those costs are deducted. After all an indiviual is not allowed to deduct all their living expenses from their wages and only be taxed on their disposable income, so why should companies?



You are trying to compare personal taxation with business taxation and the two are very different beasts. Tax is a complicated problem and it needs fairly complex rules to deal with it. I do agree though that our system is more complex than it needs to be.

Chris
[1] That sounds a bit like some videos I've seen...


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## akirk (21 Oct 2020)

they are good examples - but it wouldn't be difficult to simplify the current deductibles system - and to e.g. simply allow the costs of the goods to be removed... effectively that is what the VAT component of tax does - VAT = value add tax, and that is what we are discussing here - so in your examples, the value add for the plumber in scenario 1 is £2k / in scenario 2 is £0 and for the speaker is £19k - so tax each of those and the tax bills at your hypothetical 10% would be £200 / £0 / £1,900 respectively - seems fair...

VAT effectively does that by allowing you to reclaim the VAT you pay against that you bill - so effectively you only end up paying the government the difference - or the VAT on your value add...

so maybe ditch corporate tax and just add onto the VAT rate?!


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## space.dandy (21 Oct 2020)

akirk said:


> they are good examples - but it wouldn't be difficult to simplify the current deductibles system - and to e.g. simply allow the costs of the goods to be removed...



If I understand your suggestion, then no, your attempt to simplify the system has just made it more complex. You now have to differentiate which costs are 'goods' passed on to the consumer and which are simply costs of doing business. That is simple if you're just buying flat pack cabinets from Wickes, but what if you're a cabinet maker? You buy wood, some of which will end up as a 'good', some of which will be wastage and offcuts which are business costs and you have to apportion the two. How much of your 2L tub of glue constitutes the 'good'?



akirk said:


> effectively that is what the VAT component of tax does - VAT = value add tax, and that is what we are discussing here - so in your examples, the value add for the plumber in scenario 1 is £2k / in scenario 2 is £0 and for the speaker is £19k - so tax each of those and the tax bills at your hypothetical 10% would be £200 / £0 / £1,900 respectively - seems fair...
> 
> VAT effectively does that by allowing you to reclaim the VAT you pay against that you bill - so effectively you only end up paying the government the difference - or the VAT on your value add...
> 
> so maybe ditch corporate tax and just add onto the VAT rate?!



Sorry, I'm afraid you're a little off base here. VAT is a consumer tax; VAT registered businesses do not pay VAT. The VAT component of all goods from sawmill to timber yard to joiner is passed down the chain to the consumer, with the tax increased at each stage in proportion to the value being added by that stage. That's why trade suppliers typically list prices excluding VAT -- it's not to make themselves seem cheaper, it's because VAT registered buyers don't care about the VAT, they never see it.

Your suggestion, in a nutshell, would mean that you would be asking aunt Mavis to pay your tax for you.


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## profchris (21 Oct 2020)

akirk said:


> ... it wouldn't be difficult to simplify the current deductibles system - and to e.g. simply allow the costs of the goods to be removed...



True, but then you're taxing profits, not income, which is in fact the current system!

Moving all tax to VAT has regularly been proposed, but it's known that this puts a far higher tax burden on the least wealthy and a lower burden on the most wealthy.

Complex, huh? Which is why it's worth my student writing her PhD on taxing digital companies.


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## akirk (21 Oct 2020)

space.dandy said:


> If I understand your suggestion, then no, your attempt to simplify the system has just made it more complex. You now have to differentiate which costs are 'goods' passed on to the consumer and which are simply costs of doing business. That is simple if you're just buying flat pack cabinets from Wickes, but what if you're a cabinet maker? You buy wood, some of which will end up as a 'good', some of which will be wastage and offcuts which are business costs and you have to apportion the two. How much of your 2L tub of glue constitutes the 'good'?


No - I was suggesting exactly the same as the way in which VAT works



space.dandy said:


> Sorry, I'm afraid you're a little off base here. VAT is a consumer tax; VAT registered businesses do not pay VAT. The VAT component of all goods from sawmill to timber yard to joiner is passed down the chain to the consumer, with the tax increased at each stage in proportion to the value being added by that stage. That's why trade suppliers typically list prices excluding VAT -- it's not to make themselves seem cheaper, it's because VAT registered buyers don't care about the VAT, they never see it.
> Your suggestion, in a nutshell, would mean that you would be asking aunt Mavis to pay your tax for you.



Do you not think that Aunt Mavis is already paying the tax? where else is my business income coming from to pay corporation tax if not from the end user?
Businesses can already offset other business costs pre tax, so it is always the consumer who picks up the tax bill - however you calculate it the essence of tax is that the consumer pays it - while most obvious with a clear cut tax such as VAT, the consumer picks up the bill - when taxes rise, do companies reduce the pay to their shareholders / executives? or do they increase their prices? With the recent digital tax designed to catch Amazon - what happened? Amazon added it onto the costs paid by those who trade through the platform - who will therefore get that price increase? The consumer - Bezos profits aren't impacted...



profchris said:


> True, but then you're taxing profits, not income, which is in fact the current system!
> 
> Moving all tax to VAT has regularly been proposed, but it's known that this puts a far higher tax burden on the least wealthy and a lower burden on the most wealthy.
> 
> Complex, huh? Which is why it's worth my student writing her PhD on taxing digital companies.



the question though isn't just about what is fair to different groups of consumers - but also to different businesses - the underlying 'anti-Amazon' feeling over taxes is that they pay disproportionately less tax than the 'average' business - so it would iron out that issue... arguably you might collect more tax and be able to offer more allowances etc. to the poor - though in reality you would simply change the shape of business and lose some, so it would be a more complex result...

intrigued by the concept of VAT being detrimental to the least wealthy - surely VAT is a tax on purchases, it is zero-rated on many products (e.g. books / children's clothing etc.) which is designed to help it not affect the purchase of essentials - but the least wealthy are surely spending less and therefore spending less in tax? There are many options open to how we purchase - many of which don't include VAT... (I am quite a fan of charity shops / jumble sales / car boot sales / ebay / etc.) none of which are likely be charging VAT.


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## space.dandy (21 Oct 2020)

akirk said:


> No - I was suggesting exactly the same as the way in which VAT works



I thought you were attempting to differentiate between costs that are directly passed on to the consumer and costs which are incidental to the running of the business.



akirk said:


> Do you not think that Aunt Mavis is already paying the tax? where else is my business income coming from to pay corporation tax if not from the end user?



Sure, you can make that argument philosophically, but it doesn't work like that technically. The difference between the technical and the philosophical is what allows businesses the flexibility to remain competitive by adjusting price points and profit margins. If you hard code business tax into VAT then it removes that flexibility and forces the business to raise the price of the end product.


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## akirk (21 Oct 2020)

ultimately any business producing the identical or equivalent product will compete in a number of places:
- costs of source materials (e.g. buy in bulk)
- costs of manufacturing (e.g. make it in China)
- costs of staff (i.e. more efficient and use fewer staff / have younger and cheaper staff / etc.)
- costs of overheads (as a VC once said to me he always looks for fountains and porsches - expensive HQ / company cars / directors' perks / etc.)
- brand awareness and cost of marketing
- etc.
none of those need to have much impact on taxation and all would still have the ability to be adjusted to be more or less competitive...

if you have a product with:
£40 costs
£60 profit
£20 VAT - for a total sale price of £120
the company will pay £12 tax (lets assume corp. tax of 20%!) and take home £48
If you put that £12 onto the VAT the government will want £32 VAT
so, your total of £120 will be £88 product and £32 VAT (roughly 36% VAT)
the company still takes home £48
Aunt Mavis is still paying £120
everything is the same - but it is less complex and there is less opportunity to 'play' with tax laws to avoid tax...

I am not really advocating this - I am one of those who doesn't have an issue with Amazon following the laws as written, even if that means they pay less tax - I think that we should simplify the laws, structure them into more bands for businesses as they grow and then let companies get on and make money... if you wanted to stay parochial you could simplify further and penalise money exiting the country - so a business earning £1m in the UK pays e.g. 20% tax - but from abroad, pays 22% etc...


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## space.dandy (21 Oct 2020)

akirk said:


> if you have a product with:
> £40 costs
> £60 profit
> £20 VAT - for a total sale price of £120
> ...



You're assuming a number of things. You have assumed that the company wants to 'take home' the profit and you're assuming that avoiding tax is a bad thing, which isn't always the case. One of the ways that companies can 'avoid' corporation tax is by reinvesting profits back in to the company, growing the business, employing more staff. This 'avoidance' has benefits to the economy and employment and is generally considered a good thing.

I'm going to shut up now, as I'm wandering into areas of taxation about which I know relatively little -- my business doesn't pay corporation tax for one thing.


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## akirk (21 Oct 2020)

space.dandy said:


> You're assuming a number of things. You have assumed that the company wants to 'take home' the profit and you're assuming that avoiding tax is a bad thing, which isn't always the case. One of the ways that companies can 'avoid' corporation tax is by reinvesting profits back in to the company, growing the business, employing more staff. This 'avoidance' has benefits to the economy and employment and is generally considered a good thing.
> 
> I'm going to shut up now, as I'm wandering into areas of taxation about which I know relatively little -- my business doesn't pay corporation tax for one thing.


I am not really... 
I am certainly not assuming that avoiding tax is a bad thing - in fact I am one of the few who has been arguing that Amazon should not be blamed by following the system and minimising the tax they pay... I am simply making a point that there are different ways in which you can collect tax and that in the UK we have two major forms of tax a company pays (well PAYE as well, but let's leave that one out for now!) and there is little issue with VAT - or how Amazon deals with VAT as far as I know - yet there is a psychological difference with corporation tax - there are so many rules and exclusions, exemptions and grants that it has become over-complicated to the extent that no one person fully understands it all - and that is what allows companies such as Amazon to find ways to avoid paying un-necessary tax... were it to be simplified, then that would be less likely...

I probably know as much / as little as you about tax - though my company does pay corporation tax, and VAT - so I am aware of some of the loopholes and that every company has decisions to make as to whether you walk a slightly dodgy line pushing legislation, or follow it fairly straight - we are pretty straight down the line, but that doesn't mean that I am anti-Amazon who undoubtedly pay proportionally far less tax than my company...


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## profchris (21 Oct 2020)

The main reason Amazon pays little corporation tax is because it's not a UK company. It's residence is Luxemburg.

The international tax law rules I mentioned in a previous post say that such a company only pays corporation tax if it makes sales (not delivers, that's a separate function) through a UK establishment - premises and staff used for selling. Amazon doesn't need a selling establishment So Amazon's profits are mainly taxed in Luxembourg. But the VAT on UK sales is paid in the UK.

Like I wrote, this needs international tax law agreements to change. 30+ years into the process, this hasn't yet happened.

Shifting all taxes to VAT would mean Amazon pays proportionally the same as other sellers, true. But it does change the relative prices of products.

Currently:

Product A, costs 80, profit 20, VAT 20. Corporation tax 4, so after tax profit 16. Price to consumer 120

Product B, costs 60, profit 40, VAT 20. Corporation tax 8, after-tax profit 32.

Assuming all tax is VAT at 25% and after tax profits don't change:

Product A, costs 80, profit 16, VAT 24. Price to consumer still 120, tax take the same.

Product B, costs 60, profit 32, VAT 23. Price to consumer now 119.

So the higher the profit margin, the lower the tax take becomes proportionally.

High margin products tend to be bought by richer people, so they benefit more. And to retain the total tax take we need maybe a 27% rate, which makes Product A (bought by poorer people) more expensive than it was.

To make it worse, Amazon still wins because it doesn't have the costs of physical businesses, like rent and rates. So its prices are still cheaper, because the costs make part of the price, all of which attracts VAT. If Amazon's costs are lower it can charge less than the physical business, and the higher the VAT, the cheaper Amazon is comparatively.

It's a highly complex problem to solve. For those problems, attractively simple solutions rarely work.


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## akirk (21 Oct 2020)

profchris said:


> High margin products tend to be bought by richer people, so they benefit more.


Always the case?
plenty of cheap tat with low cost but high profit margins
plenty of expensive kit (eg digital cameras) with very low profit margins... assuming that we are referring to % margins not absolute margins...


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