Friday, 7 December 2012

The only thing Starbucks has done wrong is offering to pay more tax than it needs to

Starbucks purveys mildly overpriced hot beverages and sweetmeats to middle class folk in fairly pleasant surroundings. In order to do this, it has opened over 760 coffee shops in UK high streets at a time when the high street is dying on its feet, while employing thousands of staff at a time of high unemployment. Like any successful business, it employs an A-team of psycho-nutter-bastard accountants whose job is to make sure that the company pays as little tax as possible while not breaking the law.

Judging by the treatment the company receives from politicians, trade unions, left-wing pressure groups and the scum-sucking hooligans of the anti-capitalism “movement”, you’d think their core business was selling heroin to minors.

There seems to be an unwritten rule whenever two or more crusties are gathered together in order to whine about the cosmic unfairness of people who work for a living having more stuff than them, a Starbucks window will be smashed. Trade Unions – who know as much about creating wealth and jobs as I do about nuclear physics – hold demonstrations because, while the company pays above minimum wage, it doesn’t pay the unions’ living wage – a sort of left-wing Platonic ideal wage, unrelated to the world in which the rest of us live, where businesses try to make profits (for any trade unionists or bankers reading this, that's where you make more money than you spend - tricky concept, I know).

As for all the nonsense about exploiting the Third World, well, first, countries which belong to the EU should really shut up about this, given that restrictive trade policies and an obsession with climate change are doing so much to keep the third worlders poor. Second, what looks like exploitation to a Western liberal is often the difference between making a living and starving to death for a family producing coffee. Third, Starbucks is the main buyer of Fair Trade Coffee in the United States (although, inevitably, bleeding hearts who get their kicks out of making sure that victims stay victims bleat that the company should buy more FTC).

When it comes to tax, it’s simple enough. Not the tax system, of course, which is evidently incomprehensible – it’s the principle that’s simple. As a capitalistic enterprise, Starbucks shouldn’t pay more tax than it needs to. If it hasn’t paid the tax it’s legally liable for, it should be clobbered and fined. If it has observed the law, it has nothing to apologise for. If the government doesn’t like the fact that Starbucks is able legally to avoid paying as much tax as the government would like it to pay – the government should change the rules, rather than resort to moral blackmail.

The only reason Starbucks has – pathetically – agreed to stump up £20m in corporation tax over the next two years is to avoid its stores being boycotted by Britons having one of their sporadic outbursts of moral outrage over the evils of business. I just hope Amazon and Google ignore the whole furore and go on paying the least amount of tax they have to pay – on the basis that corporation tax is as unfair and counter-productive and immoral as death duties, and that the government will only go and waste it on something as silly as helping poor countries produce “green” (i.e. expensive and useless) energy or on tarting up the Old Street roundabout (I mean, for God’s sake!).

The only thing I really object to about Starbucks is that they’ve turned buying a simple cup of coffee into a sort of extended SATs test. As for their bizarre decision earlier this year to publicly endorse gay marriage – any more of that sort of nonsense and I’d be tempted to boycott them myself. 

6 comments:

  1. A very sensible post. Appreciated.

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  2. Where will it all end?

    I'm glad you ask.

    GAAR.

    It goes without saying but I'll say it anyway that that stands for General Anti-Abuse Rule, please see HM Treasury.

    If the parliamentary draftsmen could specify loophole-free corporation tax laws, they would. They can't.

    HMRC raised £48 billion of corporation tax in 2011-12 anyway (p.6),so they're not doing too badly. But a lot of revenue they would like to get their hands on is withheld by the master craftsmen of the Worshipful Company of psycho-nutter-bastard accountants to whom you advert.

    There's what the legislation says. And there's what the draftsmen kind of intended to say. The gap between them is a toll-free motorway down which Starbucks et al ... bowl in their coach and horses.

    How about we close the gap, HM Treasury asks itself?

    How?

    By having a GAAR such that corporations owe in tax whatever HMRC think they owe. Never mind what it says in the legislation. The important criterion is what we meant. Problem solved. Everyone happy.

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  3. Admirably libertarian approach. If the taxation regime isn't clever enough to catch up with the cyber concatenation of spurious Swiss coffee bean tax free throughput companies, offshore transactional facilitators and Ruritanian- based pecan pie ingredient entrepreneurs, then we should celebrate the fact that, although they pay close to zero tax, Starbucks and the other low quality, mass turnover chains are at least turning all our quirky English town and village high streets into Identikit facsimiles of each other so that we can feel nicely familiar with the surroundings wherever we go.

    Still, we should probably be additionally grateful for the employment opportunities it and companies like Pret and MacDonalds offer to foreign students topping up their allowances, our overstayers and those of our home-grown graduates who haven't managed to secure jobs in accountancy firms specialising in minimising the tax liability of foreign firms operating in the UK.

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  4. You must have a long memory if you’re talking about the quirky individuality of British high streets! I seem to remember that quintessentially British brands had no problem making every high street resemble every other high street decades ago – e.g. W.H. Smith, Wimpey, Dolcis, Boots etc. I watched a host of small, unique High Street shops being destroyed in Cambridge in the early 1970s, not by Engulf & Devour-style US brands, but by the greed, philistinism and insensitivity of the local (Tory) council. Besides, my bet is that if the omni-shops weren’t there, you’d have even more boarded-up storefronts and crappy pound-shops.

    As for “low-quality”, I think you’ve forgotten just how dismal British eateries and tea-shops used to be (stewed tea and curling cucumber sandwiches, anyone?). When it comes to the sort of employees working in these places – well, it isn’t the job of employers to sort out our crappy economy or police our borders, is it? And, as I said, if our politicians want to squeeze more money out of these job-creating, economy-enhancing chains (to pass onto Europe or wherever the government feels like wasting it) then they should change the ludicrously complex tax regime.

    Come to think of it, I rather fancy a Big Mac.

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  5. No tax system can ever be as efficient as the people who are determined to find ways round it. I completely agree that ours is ridiculously complex. It's still basically a New Labour anti-enterprise model. However, it is a differential model, skewed againgst SMEs and indulgent to big corporations and their clever off shore tax minimising arrangements. And as each local council raises the local taxes on businesses to raise revenue for statues of Alderman Foodbotham and same sex marriage awareness coordinators or whatever else they spend money on except bin collection, it follows the same pattern and reinforces the problem, which leads to the Harmonised High Street.

    It's entirely consistent to point out that Starbucks is not breaking the law at the same time as admiring people who intend to boycott its products because what Starbucks is doing is objectionable.

    Do you have a Big Mac? No, but I've got a dark brown overcoat. ( Thanks Bonzos.)

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