Starbucks avoids paying tax for three years

October 17, 2012

business

One of, if not, the most loved franchised coffee shops operating in the UK has been heavily criticised in recent days. It has come to light that Starbucks have not paid any tax for the last three years; despite sales of £1.2 billion.

starbucks

Image via Marcopako

That might sound inappropriate behaviour for such a large corporation, but Starbucks aren’t doing anything illegal.

Through a number of loopholes such as offshore licensing (read this special report by Reuters for more details) Starbucks are allowed to avoid paying tax. But does this make it okay?

Starbucks have reiterated it is not their job to create tax laws, but merely to follow them; and they do. But this has a massive knock on effect on local and British businesses up and down the country that have to compete everyday against the Goliath that is Starbucks.

Take for instance another major player in the coffeehouse market, British company Costa Coffee.


#Starbucks pays nothing and Costa £15 million in corporation tax. Think I will vote with my feet. #boycottstarbucks
@MarksLarks
Mark Stephens

The fear is with the advantage of paying no tax will lead to Starbucks dominating and eventually the market will become a monopoly. There aren’t many markets on the high street where you have a plethora of choices and everyone has a different place to go to, but coffee shops are one.

The loss in tax revenue from large corporations also has an effect on the British economy as a whole. When the country’s in recession, Britain could really use this tax to boost the economy. It makes me wonder, are there other companies using similar tactics to avoid paying tax?

There have been murmurs of a possible boycott by consumers until Starbucks do something to correct this. Whether this comes to fruition we’ll wait and see. Today, pressure continues to grow after a senior MP, Margaret Hodge, called for the HRMC to launch an inquiry into the matter by.

Here are just some of the reactions from Twitter.


Remember: the reason why we don’t have independently owned cafes on the highstreet is Starbucks. Now they don’t pay tax?! Beyond offensive
@MaryTracy
Mary Tracy


A new report has found that in the last 14 years Starbucks has paid 1% corporation tax, which in their terms is a ridiculously tall amount.
@bbcHIGNFY
HaveIGotNewsForYou


People talking about boycotting Starbucks over their tax should’ve boycotted them over their coffee long ago. It’s awful.
@RobCarr
Rob Carr


Starbucks coffee farmers would need to work for 3 days before they could afford to buy a cup of their own coffee.
@InjusticeFacts
Injustice Facts


#Starbucks pays nothing and Costa £15 million in corporation tax. Think I will vote with my feet. #boycottstarbucks
@MarksLarks
Mark Stephens


Starbucks might need to re-think the design on their van doors! http://t.co/SJUaFHPt
@asnood
Adrian Snood 

Is this another loophole the HMRC need to close? Will you be boycotting the coffee chain? Tell me what you think in the comments below.

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