LVCR, CD, DVD and SE

Just like many people I have been guilty of buying CDs and DVDs online, where the prices always seem to be that little bit lower. And when I am buying in commodity mode, then price is obviously a motivator, let alone helping avoid the soul-less dreadful experience that is HMV. I know downloading is the future (and the present, but not yet for me), but just for now cheap CDs from the Channel Islands fit my bill.

Now, I have a soft spot for the Channel Islands and not just for tax reasons, but there is something a little bit off about their (and other places) exploitation of LVCR (that is Low Value Consignment Relief to the rest of us). This allows VAT to be avoided on goods that are imported from outside the EU for a value of less than £15; ideal for DVDs and books and so on.

Which is why many businesses and their agents have set up in the Channel Islands and operate fulfilment centres to service the UK. The unfairness and impact of this was heavily criticised by the Tories in opposition and it is why the UK government may/will use the upcoming budget to close the loophole this year.

Much of the detail is covered in an article in this week’s Observer, which asks some very interesting questions about the ethics and politics of this, in reporting on an attempt by the Channel Islands to stymie the government in the Courts this week.

But it was not these questions that caught my eye. Rather it was the statement “Perhaps surprisingly, Scottish Enterprise, a UK government-funded investment quango, has also invested in the parent company behind Indigo Starfish” (Indigo Starfish is Amazon’s main partner in the Channel Islands). I do not know if the claim is right, but it is certainly arresting.

Many small retailers have been complaining for years about this loophole and the possible link to their declining business and the health of the high street. We have government (in the UK and Scotland) very worried about our town centres and their futures. And we have the same government investing heavily in Amazon in Dunfermline and now seemingly an arm of the government in Scottish Enterprise investing in an offshore tax loophole exploiting business. What are they up to? And how does such investment fit with the rhetoric of supporting the high street?

If we are serious about our towns and high streets, it might be nice if money wasn’t spent on actively supporting the businesses that such places and shops compete with. If we are going to succeed in keeping places in Scotland we can be proud of, then all efforts should be focused on this aim, and not just some of them, some of the time.

About Leigh Sparks

I am Professor of Retail Studies at the Institute for Retail Studies, University of Stirling, where I research and teach aspects of retailing and retail supply chains, alongside various colleagues. I am Chair of Scotland's Towns Partnership. I am also a Deputy Principal of the University, with responsibility for Internationalisation and Graduate Studies.
This entry was posted in Competition, Government, Internet shopping, Online Retailing, Retail Policy, Scotland's Town and High Streets, Tax and tagged , , , . Bookmark the permalink.

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