Folkestone and Hythe MP blames current taxation system for giving internet firms a massive advantage over high street traders

Contributed by editor on Aug 15, 2018 - 06:05 AM

Constituency matters... a weekly column by the Member of Parliament for Folkestone and Hythe, Damian Collins 15 August 2018


Changing nature of our shopping


The collapse of the House of Fraser group, with its 59 department stores around the country, including in Maidstone and at the Bluewater shopping centre near Dartford, is about more than the failure of a business. Instead, it seems to signify another major step in the changing nature of our shopping habits and town centres.


House of Fraser is a famous brand in its own right, but around the country, its stores originally traded under other well-known names including, Army and Navy, Beatties, Cavendish House, Kendalls and Howells – what these businesses had in common was that whilst they may have been founded by different people, they had all previously become the leading places to shop in the towns and cities they served.

There can be many reasons for the closure of a business, and it may be that its new owners will be able to revive the fortunes of House of Fraser. However, they are competing against internet shopping, with companies like Amazon acting as the ultimate department store, often beating their competitors on range, price and convenience.


Business owners in Folkestone


When I speak with business owners in Folkestone town centre they will all say that you cannot rely on walk in trade, and that you have to be able to sell on the internet as well. In addition to this, your store has to be able to offer good levels of service, and a positive customer experience.


In many ways, our town centres are changing from being places where people went to work or do their shopping, to spaces which provide a leisure experience. The regeneration of Folkestone is a good demonstration of this with new bars, restaurants and gallery spaces opening, alongside shops.


One hand tied behind their back

However, what all town centre traders will rightly highlight is that they are taking on the internet firms, particularly retail giants like Amazon, with one hand tied behind their back, as the tax system provides a massive advantage to their larger competitors.


Last year, for example, the corporation tax paid by Amazon UK Services almost halved to £4.5m, despite its turnover rising by rising 35% from £1.46bn to £1.98bn. By comparison, this low amount of tax paid for a business of this size, was less than half of the annual rent paid by House of Fraser, just for its store in London’s Oxford Street. Also, Amazon’s UK business rates bill was less than 10% more than House of Fraser’s last year, despite their income being eleven times greater.


Unfair system of business taxes

We cannot allow such an unfair system of business taxes to continue. If we do it will act against innovation and competition as small firms will be driven out of business by the internet giants. Companies like Amazon should be paying more tax and we need to look again at reforming the business rates system, which is penalising businesses that trade in our town centres, and or, require more space to display their goods, even if their profit margins are low.


I will be making this case to the Chancellor of the Exchequer Philip Hammond ahead of the Budget this autumn.

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