Amazon Tax vs. The Premier League – A Story of Two Halves?

Amazon tax v the stars of the Premier League

Over the course of the last 20 years or so, our leisure habits appear to have changed radically.

Consider just two national pastimes, football and shopping, for instance.

Back in the early 1990s, the basic structure of English league competitions had remained largely unchanged since it was established more than a century before.

The start of the inaugural Premier League in August 1992 not only changed how we and the rest of the world watch this country’s top flight matches.

It became so popular that the eye-watering sums which it is able to generates in broadcast rights helped make the League’s stars some of the sport’s best paid players.

The sale of a single CD by Sting, almost two years to the day later, might not initially have seemed quite so earth-shattering.

However, that transaction – the first recorded e-commerce purchase – precipitated nothing short of a revolution in how we buy and consigned the weekend trip to the high street to history.

Only a month beforehand, the company which would eventually be renamed Amazon was born.

Buoyed by the appetite of consumers for buying more than Sting’s CDs online, Amazon’s recorded profits in the UK rose by more than 200 per cent over the course of the 12-month period covered in its last annual accounts – up from £26.5 million to more than £79 million.

It also went from earning a tax credit of £1.3 million to a position of paying £1.7 million in tax but, still, that hasn’t been enough for some people.

A number of commentators suggest that Amazon should pay more tax. So great has concern about the retailer’s astonishing growth been, that the proposed new ‘digital services tax’, announced by the Chancellor of the Exchequer, Philip Hammond, in October’s Budget, even started life as ‘the Amazon tax’.

When one of the Premier League’s current stars agreed his latest huge contract – and, with it, eschewed offshore image rights tax structures to receive part of his income – it proved to great an opportunity to miss for Amazon’s critics.

Chelsea midfielder N’Golo Kante signed his £15 million-a-year deal after winning the League title twice in two seasons – with his current side and, the year before, with Leicester City. He was also part of the French national team that won this summer’s World Cup for good measure.

It was estimated that the deal means he will pay more than £6.5 million pounds in Income Tax and National Insurance Contributions (NICs) a year – far more than Amazon.

If complaints about relative contributions are made purely on tax paid, it seems – if you pardon the pun – an open goal.

Anyone who’s watched him play would doubt that Kante makes a telling contribution to his team’s performance but those who rely so heavily on e-commerce might well maintain that Amazon is equally important to them and those who work for it.

In the same year that it saw its UK turnover surge, the size of its UK workforce increased by more than a third. By the close of its 2017 accounting period, Amazon were employing 19,749 staff – up by more than 5,500 on the year before.

Importantly, this resulted in Amazon paying wages of £530m all of which would, we assume, be subject to PAYE.

It is therefore clear that Amazon’s actual contribution to UK plc is somewhat under-egged.

For the sake of argument, it might be a more accurate comparison to rank Amazon’s performance not against an individual multi-millionaire footballer but, say, to the club which he represents.

Roman Abramovich’s acquisition of Chelsea in 2003 was an indication of how the glamour and riches of the English Premier League were appealing to some of the world’s wealthiest men and women.

Under his ownership, the club has been hugely successful on the pitch, its trophy haul including five Premier Leagues and one European Cup.

Off the pitch, it has also progressed. Turnover stated in the last full-year accounts rose by nearly 10 per cent to £361.3 million but, at the same time, the tax which it handed over to HMRC fell to £385,000.

That was less than half of the previous year’s total (£827,000), less than a quarter of the size of Amazon’s last tax bill and is less than the amount N’Golo Kante will reportedly pay in a single month over the course of his new contract.

Chelsea supporters in the UK and far further afield will, perhaps quite naturally, underline that the club makes its own contribution to their lives but, without wishing to take sides, the numbers illustrate the difficulty in advancing simplistic arguments about tax in this new and enriching age of soccer and shopping.

If you have any queries or comments on this article then please do not hesitate to get in touch.

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