Saturday, October 20, 2012

Starbucks brand hit by UK tax criticism

Public awareness of tax avoidance and public perception of wrong doing makes a difference.

From Reuters -

"Starbucks's reputation among consumers in Britain has been hit by wave of criticism of its tax affairs from politicians and the media, pollster YouGov said.
A customer sips her coffee in Starbucks' Mayfair Vigo Street branch in central London September 12, 2012. Picture taken September 12, 2012. REUTERS/Andrew Winning

A Reuters report showed the coffee chain paid no tax on 1.2 billion pounds of sales in recent years by telling the taxman it was making no profit, even as it told investors the unit was "profitable".
YouGov said its BrandIndex survey of 2,000 people showed a drop in the its reputation score to -26 from +3.
Starbucks's Buzz score - whether people have heard anything positive or negative about the brand in the media or through word of mouth - is now -9 compared to zero before the Reuters report was published.
"The story exposing Starbucks's tax arrangements has definitely dealt a blow to its brand. We have been monitoring it closely, and each day since the story broke we've seen public perception of Starbucks become more and more negative," said Sarah Murphy, YouGov's director of BrandIndex.
Starbucks Chief Executive Howard Schultz defended the company's tax affairs on Friday, saying it paid no UK tax because it made no profit in Britain, even after 14 years of operations."
Editor's note: we didn't know that Starbucks is a charity, providing UK public with coffee at a loss for 14 years!  Or is it management incompetence to operate at a loss after 14 years despite making revenues of £1.2 billion?

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