James Moore: Sorry Amazon, but job creation doesn’t compensate for tax avoidance

Outlook A missive from Amazon drops into my inbox. The retailer, tech giant, delivery drone developer and candidate to replace Spectre in the next Bond movie, wants to trumpet the thousands of new jobs it created last year.

Six thousand, in case you were interested, and apparently that is the most since amazon.co.uk and amazon.de marked the launch of the group’s assault on the European consumer in 1998.

That’s quite a number, and it includes some highly skilled, and presumably highly paid, posts alongside the legions of, ahem, “fulfilment centre associates” who work in the company’s vast warehouses in conditions that have attracted considerable negative comment.

There is, of course, a reason Amazon wants us to know about all those new posts it has created (and those it plans to create) and it goes beyond a desire to indulge in a little new year preening.

The clue comes at the start of the press release, informing us of the locality from which it was sent: Luxembourg.

Amazon is one of those companies that have come under fire for the pitiful rates of corporation tax they pay here. Part of the reason for that is its Luxembourg locale, which (as I noted with Shire Pharma yesterday) has become infamous for giving the old rubber stamp to any number of questionable, but still just about legal, tax avoidance schemes hawked by clever accountants.

One of the methods to which companies like Amazon have resorted in an attempt to defend the indefensible has been to point to the jobs they have been creating.

Look. See. That’s how we make a contribution. We create jobs, and our employees pay national insurance, income tax, and so on. Then there’s the VAT people pay on what we sell.

We’ve heard this sort of argument aired in numerous parliamentary hearings. We’ll probably be hearing it again before too long. It provides the subtext behind Amazon’s cynical, self congratulatory press release, put out at a time when the company’s tax affairs are under investigation by the EU.

The argument I referred to is, of course, a fallacious one. The fact that a company employs people who pay taxes, or who have taxes paid on their behalf in the form of employer national insurance contributions, does not and should not exempt it from making its own contribution. Nor does the fact that it sells things to people who pay VAT on what they buy.

The fact that Amazon doesn’t make much of a contribution also provides it with an unfair competitive advantage against those companies that do, slowing their growth and hampering their ability to create jobs in Britain.

Amazon is a brilliant business that provides its customers with a superlative service. But because of all this it’s very hard to feel good about using that service and it’s hard to cheer its job creation, even if job creation generally is a thoroughly good thing.