Starbucks’ tax dodge is ‘no storm in coffee cup’
Labour Land: ‘Starbuck’s tax dodge is no storm in a coffee cup’
An investigation has revealed that the international coffee chain Starbucks has paid just £8.6 million on its UK profits in corporation tax in 14 years, and not a bean for the last 3 years.
It is the latest in a long line of revelations of aggressive tax avoidance from companies and individuals – Barclays, Facebook, Google, the BBC, Jimmy Carr – which has seen tax compliance (or more often the lack of it) become a front page issue.
Tax avoidance is legal, but it usually involves highly dubious and artificial transactions that have no economic rationale other than outwitting the tax man. These involve loading the company up with debt, obfuscating where economic activity takes place, and using tax havens – depriving governments of much needed revenue (which they usually then get from the majority of honest taxpayers from whom the tax dodgers are free-riding.)
“Taxes are the price we pay for a civilised society.” It is the means by which we pay for the armed forces that defend us, the laws and police officers that protect us, the schools that educate us, the doctors and hospitals that cure us, and much else besides. We decide democratically how much tax we are expected to pay for these public goods we receive in return. Egregious tax avoidance is therefore rather like buying an Espresso Frappuccino in a Venti cup with 16 shots of espresso, a shot of soy milk, caramel flavouring, vanilla beans and a drizzle of caramel and mocha and only giving the Barista a penny to pay for it. You get the benefits without paying the full costs.
Worse than that, most ordinary people, who do pay their full taxes, end up paying more to compensate for the tax gap. Everyone who is seeing their child benefit being taken away, their salaries frozen, their local services being closed should ask angrily why they are being made to pay, when others are paying nowhere near their fair share. The small high street coffee shop does not have the ability to dodge its taxes like Starbucks and should be allowed a level playing field.
Dealing with tax avoidance requires a comprehensive response. A General Anti-Avoidance Rule should be adopted. We should come down hard on tax havens – especially the many that are British dependencies. HMRC should be well staffed and resourced. We should require country-by-country reporting, so we know where economic activity takes place and so developing nations can get the revenues from multinationals to pay for much-needed health and education programs.
Can we also suggest that changing the tax base could help. Land cannot be moved – Philip Green cannot airlift the sites his stores sit upon over to Monaco. Apart from its many other excellent economic and equitable qualities, an annual Land Value Tax could provide a large and stable source of tax revenues that can’t be avoided. It’s time to wake up and smell the coffee.
(This news article is submitted by the UK Labour Land Campaign. For more details visit www.labourland.org)