No plans for online sales tax to combat Amazon dominance, says Hammond

An “online sales tax” is not among Government plans to tackle the dominance of tech giants like Amazon and Facebook, Philip Hammond has said.

The chancellor said that the Government was looking at improving “fairness” but wanted to focus on companies whose business models were “exploiting either the personal data of UK consumers or exploiting content which is uploaded by UK consumers”.

It came as a Treasury taskforce examining competition in the digital economy issued a call for evidence on “whether competition in the digital market is being stifled by powerful tech giants”.

Companies including Amazon, Google and Facebook are facing increasing pressure over the discrepancy between their soaring profits and the low rate of tax they pay.

Conservative Party annual conference 2018
Conservative Party annual conference 2018

Mr Hammond, attending an International Monetary Fund conference in Bali, Indonesia, told Bloomberg TV that Britain would prefer an international agreement on the fairness issue but “if we can’t achieve that then I am prepared to look at a UK-only solution”.

He said: “We are not looking at the moment at an online sales tax on the sale of goods over the internet, we are looking at those digital platform companies that add value, create value, by interacting with consumers.

“We believe that value added process takes place in the location the consumer is and therefore that is where it should be taxed.”

Mr Hammond announced in August the creation of a panel led by Harvard Professor Jason Furman, the chief economic adviser to former US president Barack Obama, that would look into competition in the sector.

It is due to publish a report early in 2019.

The Chancellor added on Friday that there were concerns that “big players could be accumulating too much power in our new digital world”.

The committee will examine four areas:

– The pros and cons of the current market, “where a small number of companies dominate”

– Whether these firms’ accumulation of data is stifling smaller firms

– How rules can be strengthened to boost competition and choice

– How innovation can be improved to benefit consumers.

Professor Furman said: “Digital markets have produced significant consumer benefits and we are focusing on how to ensure that remains the case, while fostering competition and boosting the economy.”

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