UK Digital Services Tax aka. The "Amazon Tax"

UK Digital Services Tax aka. The "Amazon Tax"

Philip Hammond, the UK chancellor, has announced a new tax aimed at US tech giants Google, Amazon, Facebook and the like. The tax will consist of 2% of revenues from search engines, social media platforms and online marketplaces. It will apply to online firms making more than £500m a year globally, will come into force in April 2020 and is expected to raise £400m plus per year, reports the guardian.

Evidently, these US firms are not "paying their fair share" toward the operations of the UK government. To a sceptic of taxation and government generally, like myself, it's not abundantly clear why they should have any obligation to fund the UK government. Nevertheless, I would argue that, as is common with government action, this tax would not function as is claimed. It is an enduring fallacy that corporations ever pay tax, and I'm not talking about tax evasion or avoidance.

Governments like to pretend that taxes on businesses are victimless, as they are paid by a business not any specific person, or so it may appear to the unsuspecting. Businesses are made up of people, operated by people and owned by people. So it might seem that business owners are the intended target of this tax, but once again the intended target won't be the one to take the bullet.

Ultimately, all taxes are either directly or indirectly taxes on consumers, which is all of us, including businesses. This is because, when businesses are saddled with extra costs, they typically pass on those costs to their customers. As well as putting pressure on them to reduce operating costs, which include the number of people they employ and how much those employees are paid.

In summary, this tax is bad for the UK economy, as are all taxes, and represents either ignorance of economics at the highest echelons of government (big surprise), or just straight up legal plunder by the chancellor.

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