Lately Starbucks have been getting bad press from the media for not paying their taxes. Starbucks say:-
"The most important thing to understand is that Starbucks does pay tax in the UK. Indeed over the last three years we have paid over £160 million in various taxes including Pay As You Earn (PAYE) for our 8,500 UK employees, National Insurance and business rates”.
You have to larf. PAYE is tax paid by employees not Starbucks. NI is a joint tax paid by employees and employers. Business rates are an operating overhead. They know that the taxes being referred to are the taxes on the companies ‘GROSS’ profit and that should be paid before hiving off an money to set up overseas business. The HMRC said to me once “We all must pay tax on any money earned in the UK’. That's fine, but that rule applies to everyone.
When all said and done, Starbucks lied to HMRC about their gross profit.
Starbucks COO told analysts in 2007 that the UK unit's profits were funding Starbucks' expansion overseas. The Starbucks CFO stated that they were enjoying an operating profit margin of almost 15% in the UK - nearly £50m in profit.
When they filed a £26m loss in the UK a year later the CEO told Starbucks investors, the business here was so successful he planned to apply the lessons learned in the US too. Starbucks CFO referred to the UK business as "profitable" in 2009 after their accounts revealed a record £52m loss.
So not only do Starbucks evade THEIR taxes they lie as well.
Ok now should we boycott Starbucks? Not a good plan Stan. Lets assume Starbucks never sold another cup of coffee, who would suffer? 8,500 Eastern European immigrants who would no longer have a job and a £160 million pound deficit in the public purse because of the lost taxes of the 8,500 now unemployed people who will no longer pay PAYE or NI.
What’s the solution? Public pressure to ensure they pay up. Write to your MP. Write to David Cameron. And yes if you feel it might make a difference write to HMQ.
Message to Starbucks:-
Put your hand in your pocket and give us what you owe.