Wednesday, November 14, 2012

Citizens arise! Give up your lattes and Kindles

Now we're talking sense. If the government cannot or will not act or is too slow in acting, 'citizen power' is the next best thing.

From -

"If Starbucks and Amazon wriggle out of paying tax here, customers must take a stand
They track you down if you’re a small business; hound you for every last penny. They’re utterly ruthless, the men from HMRC.
A friend set up the Crazy Baker café in Kensal Rise, West London, three years ago. Every morning she wakes at 4am to knead her sour dough spelt, often working 20-hour days, harder than any CEO, to produce amazing scones, cakes and brioche. She employs a full-time bookkeeper and an accountant, but is still terrified of getting her figures wrong and the taxman’s knock on the door.
Yet down the road are two Starbucks that don’t pay a penny of corporation tax. My complaint is not about their lattes, which are adequate, or their chocolate muffins, which are passable, but about their tax arrangements, which aren’t. Of course small cafés have to compete with the big boys, but then why should they be so disadvantaged?
This week Troy Alstead, the Global Chief Financial Officer of Starbucks, went in front of the Public Accounts Committee to explain why this poor multinational simply cannot pay any corporation tax. It doesn’t make any money in the UK, he said, not a bean for its beans. He wrung his hands, then smirked as he explained the company faces “profitability challenges”.
Although Starbucks has 790 UK stores, second only to McDonald’s in the restaurant trade, it has made a profit just once in 15 years in Britain. When asked how Costa Coffee, a smaller chain, managed to make £49.5 million profit last year and paid £15.5 million in taxes, he simply said: “It’s a failing.”
The MPs of the PAC couldn’t believe it. I listened to three hours of the siege of Troy but you only have to hear five minutes to get the gist that the way Starbucks manages its affairs through Amsterdam is, in the words of one MP, “specifically designed to avoid tax”.
Amazon and Google were grilled too. The man from Amazon insisted that although customers pay in pounds for its products, which are delivered from UK centres through the Royal Mail with a British stamp, it’s a Luxembourg company. At least Matt Brittin, the chief executive officer of Google UK, admitted that the company operates from Ireland and Bermuda because of their low corporation tax rates.
Starbucks tries to sound like the caring corporate. I’ve visited the original shop in Seattle, named after the first mate in Moby-Dick. It’s cosy with its “handcrafted beverages”. Its website says “businesses can and should have a positive impact on the communities they serve”. How does paying virtually no tax fit into this ethos? But you can’t blame Troy; executives have a duty to maximise shareholder return and if they can find a legitimate way not to pay tax, of course they will.
One of Bill Clinton’s most successful TV ads in the 1992 election was: “This is the $825 billion question. That’s how much foreign corporations operating in the US took in one year. But 72 per cent of them didn’t pay a dime in tax. Not one dime.” Ed Miliband could easily borrow the same tactics.
The Government is acting — slowly. George Osborne should demand that these giants are more transparent about their operations and the Revenue should establish a ranking of companies — the good taxpayer’s guide. The Chancellor is trying to clamp down on foreign tax havens and is talking to the Germans about a plan that could see companies taxed on the sales they make in each country.
But all that will take a long time, so now it’s up to us, the consumer. Costa pays tax, so go there or to other small businesses like the Crazy Baker. Or buy McDonald’s: at least it paid £80 million in corporation tax last year. Margaret Hodge, who chairs the PAC, said she felt so incensed by Amazon that she’s given up her Kindle.
Christmas will be tricky without Amazon. But we should boycott companies that don’t pay their fair share of tax. All multinationals are vulnerable to public opinion if they have a product to sell directly to us. If consumers put pressure on them, their executives will think: if we don’t start acting responsibly, our brand will be damaged.
It may be only the “little people” who pay taxes but they also drink coffee. Starbucks should not underestimate the power of this latte lobby."

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