Public services to take hit as Amazon wins £3.2m tax wrangle over giant Rugeley depot
Written by The Newsroom on January 22, 2020
Public services will take an eye-watering hit after Amazon’s business rates were slashed for its huge distribution centre in Rugeley.
The tech giant stands to receive a £3.2 million refund as a result of changes to the rateable value of its warehouse and premises in Gazeley Park, dating back to the site’s opening in August 2011.
Central government, Staffordshire Country Council and Cannock Chase Council, will all have to cover the cost – with the latter estimated to lose £1.2m as a result, meaning there will be less cash available to spend on public services, residents and businesses.
The warehouse was built in 2009 with a rateable value of £3.18 million and revaluations in 2010 and 2017 were in line with that figure.
But Amazon appealed and succeeded in reducing the valuation to £2.5million.
Cannock Chase Council regeneration boss, Coun Gordon Alcott, said it appeared Amazon was being treated differently than other traders in the area as it did not rely on physical shops.
He said: “Amazon is a highly-valued employer in the district but the reduction in business rates is another major blow to this council, following the closure of Rugeley Power Station in 2016 which led to a loss in business rates of £1 million a year to this council.
“Business rates are determined by the Government’s Valuation Office Agency and the council has no say in this process other than it represents a key funding source to the council.
“The financial impact is of great concern to the council, however. I feel particularly sorry for our town centres and retail traders where there doesn’t appear to be a level playing field between the business overheads paid by these so-called bricks and mortar businesses against those paid by online traders.
“Although the government is offering business rate relief to some retail providers, it is only a sticking plaster and does not solve the fundamental problem.
“Amazon describes itself as providing fulfilment centres supplying goods direct to the customer and clearly the business rates system does not reflect this treating such sites as basic warehouses, which means that Amazon is paying substantially less than retail warehouses, and a fraction of the cost per square metre of high street shops.
“I have been informed the rates relate to the floor area occupied and the rent payable per square metre for the relevant facility and part of the reduction is due to mezzanine floors not counting as floor area.
“The system in my view is clearly flawed in relation to the treatment of Amazon and other such providers. We know of other Amazon sites, including one in Swansea, which have also seen significant rates reductions.
“Therefore the council will be writing to the Government and our local MP to see if this issue can be addressed before we see the further demise of yet more town centres – not only in Cannock Chase but throughout the country.”
A year ago, it was reported that Amazon was paying just £63million in business rates in Britain – despite recording sales of £8billion.
The tax bill was a closely guarded secret until the US retail giant was forced to reveal it by MPs.
Its publication angered other retailers who were pay far more – despite lower sales.
The bill was legitimate because Amazon does not have to rely on actual shops, cutting the tax it pays on premises.
At the time, Amazon said it paid a number of UK taxes and had invested more than £9 billion in the UK since 2010.
A spokesman said: “Last year (2018), Amazon paid local authorities in England and Wales more than £63million in business rates for the sites we use.
“Business rates, which are just one of a number of taxes Amazon pays in the UK, are based on the rateable value of the land a business uses. These payments are just part of Amazon’s broader £9.3billion investment in the UK since 2010, which includes creating 2,500 jobs last year.”
Updates from the Cannock Chase Radio News Desk via Birmingham Mail - Rugeley News