Financial News
- 23 November 2012, 17:12
Starbucks Website Swamped By Tax Critics
Starbucks' attempt to explain its controversial corporate tax arrangements has been met with hundreds of complaints on its UK website.
The Seattle-based company received more than 350 comments on blog postings written by three of its top officials, with many promising to boycott its stores.
Blog poster MrGlynWilliams called its tax position "sheer scumbaggery", while illi41 said: "Just pay your taxes and you will be loved. Pay no taxes, receive no love, simple."
People also took issue with chief executive Howard Schultz's claim that over the last three years it had "paid more than £160m in various taxes, including National Insurance (NI) contributions, VAT and business rates".
Angry bloggers left messages saying that neither NI nor VAT were taxes, with VAT only being collected from customers on behalf of HM Revenue and Customs.
The comments are easily viewable from the firm's UK homepage and could only be posted by people with active Starbucks accounts.
Registered user stuyvpc replied to Mr Schultz and said: "I appreciate that you allow me to comment on your statement.
"For the last 3 years a group of IT homeworkers have met twice weekly in Starbucks for a coffee and catch up.
"However as a group we have decided to move to Costa in future who at least pay some corporation tax on their profits in the same way we IT contractors do."
Rival chain Costa, owned by Whitbread, told Sky News that it would not comment on sales information outside of its normal trading announcements.
However Whitbread CEO Andy Harrison previously said: "Every consumer has the right to choose Costa over Starbucks and that is what I would recommend."
The issue of foreign multinationals paying what is seen by critics as a disproportionate level of corporation tax has become an increasingly important issue for politicians, with Business Secretary Vince Cable saying the Chancellor is expected to address the issue in his Autumn Statement on December 5.
On Thursday night Sainsbury's boss Justin King told Sky's Jeff Randall: "I think as consumers we can make this change much quicker than the Government.
"Customers have to be demanding of where they spend their money - the vote you make with your wallet is the most powerful vote you have at your disposal."
If you send a clear message as a consumer to any company you think doesn't pay its dues, you can bet your bottom dollar they will make a change very quickly."
The angry backlash has been prompted by the revelation that Starbucks paid £8.6m UK corporation tax in the past 13 years, on sales of £3.1bn.
Chief financial officer Troy Alstead has been grilled by the Parliamentary Accounts Committee, alongside bosses from Amazon and Google, but said his firm had only once made a UK profit in 15 years.
"I assure you we are not making money," he told the committee.
"It's very unfortunate. We're not at all pleased about our financial performance here. It's fundamentally true everything we are saying and everything we have said historically."
His comments came despite operating more than 700 UK stores and employing nearly 8,500 people, along with plans to employ another 6,000 staff and open 300 outlets.
Grassroots activists from UK Uncut have announced a day of action for December 8, with plans to turn Starbucks stores into women's refuges and children's creches - claiming tax the company avoids would offset slashed Government budgets for these social services.
Although most comments left on Starbucks' website are negative, some supporters defended the firm and highlighted laws which allowed legal tax minimisation.
Poster flat-white said: "There are far too many reactionary comments on here that are failing to see the bigger picture. You have a problem with lax UK/Tax laws? Complain to your MP, not your barista.
"By boycotting Starbucks you are simply putting 8,500 jobs at risk."
A Starbucks spokesperson told Sky News it may address the VAT and NI details in a new blog and added: "We are trying to be as open and transparent as possible with the blogs.
"We've left them open for comments - we welcome the open debate and hope we are being as clear as possible."
what do you think?
Ben Ralph
Simple. Don't like Starbucks legal though morally wrong tax affairs? Don't buy their coffee. They must think we're all idiots to cling to the statement they're not making money in U.K
peter
Dave - You are quite correct in that VAT is not a tax paid by Starbucks as it is paid by customers, but as employers they do pay NI for every one of their employees. Thay also pay rates on their premises. They also will pay a contribution for the new NEST pensions. They only tax they don't pay is Corporation tax (from what I read though) and they are only doing what some high profile people do - squat it overseas. Footballers, Politicians, millionaires, pop stars and the like all do it. I suggest we boycott all football matches and stop buying CDs etc in protest?
Windows Live User
I am sure we will all arrive at this finally. Hopefully by then Starbucks has led the way and cleaned up it s act before their stores have zero turnover, and then most definitely NO Profit
blue side
Starbucks might opt to simply wind down operations in the UK sell off some of its sites and look for better pickings. As a point have you guys got a savings plan, ISA or pension plan if so you are involved in tax avoidance or tax planning (one and the same). It was defined by Lord Denning MR though I can not remember the case name.
Dave Harrison
Peter Take your point about employers NI contributions as well as business rates but these apply equally to companies struggling to keep their heads above water in the present climate. Starbucks assertion that they make no profit in the UK just isn't credible
tyneview33
Easiest way to show them that people in Britain are not happy about their tax arrangements is not to use them.
blue side
I do think we are getting mob reaction fueled by the media and some idiot politicians. Might I suggest that everybody looks at the difference between Avoidance and Evasion then look at their own financial arrangements like ISAs, savings plans etc. Yep you are all involved in tax avoidance its just the number that differ.
happymike CHESTER
Most working people have paid tax on the money put in ISA`S . Your comment dose not bear any relation to tax fiddlers who make or bribe Governments to make illegal tax Evasion lawful they should all be on P.A.Y.E LIKE THE REST OF US.
blue side
happy mike who said there is any bribery the claim is clear TAX AVOIDANCE which is tax planning. Starbucks also have paid tax. TAX EVASION IS ILLEGAL per Lord Denning MR
Peter Coates
Will never go there again. ABSOLUTE ROGUES. And the coffee is trash. Like dish water.Give you a gallon in a bucket just to get rid of it.
blue side
I suggest people take the time to read what is said by Starbucks at <a href="http://www.starbucks.co.uk/blog" rel='nofollow'>www.starbucks.co.uk/blog</a> this might set straight a few point that are being overlooked.
blue side
I note those who will not accept facts by the minus marks PLEASE do a little research.
Dave Harrison
1:51pm on 23/11/2012
I applaud Starbucks for opening up their website for comments on their tax arrangements but go along with others who say VAT & NI is not tax paid by the company but by employees & customers. Starbucks are only interested in money and profit so vote with your feet and take your business elsewhere. This will have a far quicker effect than govts plugging loopholes
Windows Live User
3:37pm on 23/11/2012
Already done Dave. Now to threaten us with the loss of 8000 jobs is a dirty shot. If they dont like trading here then I for one will not miss them or their disproportionate level of corporation tax put in our treasury coffers. I am sure their bank manager will not miss their profits in his branch either I understand those that write to point out that loopholes exist in our tax laws which Starbucks have taken full advantage of. However I am going to take full advantage of my rights and drink my own coffee at home. I do hope my steps go someway toward reversing our government trend in over taxing everyone else to make up the deficit.
blue side
3:57pm on 23/11/2012
Dave I do have to differ with you we are again caught in media hype. Lord Denning MR clearly defined that tax avoidance is legal tax planning in fact if you look at an ISA, investment plan or pension there is an element of tax planning i.e. avoidance. Likewise Denning stated that tax evasion was illegal the one working within the law the other clearly not. These large companies seek two things return on investment and good business environment the more they are encouraged to invest then the greater the net tax revenue and the more employment. So let us all just take a careful look at things before jumping on the mob bandwagon. What people are looking at are figures or more accurately statistics that re not looking at the whole picture and this all smells of LibDem and Osbourne shortsighted policy.
Jim Ford
4:05pm on 23/11/2012
I remember in the 70s, the Duke of Westminster's business empire paying just 1 shilling (5p) in tax one year.
Dave Harrison
7:10pm on 23/11/2012
Blue side. I am with you on the difference between tax avoidance and tax evasion but still find the statement by Starbucks that they have not made a profit in the UK for years stretching credibility just a little too far. No doubt as a global player they declare their loses in a high taxing country and all the profits in the Cayman islands or their like
blue side
9:56pm on 23/11/2012
OK how about Comet? Dave have a look at the Starbucks blog. I am not saying they have not had some good tax advisors and no one is evidencing evasion
lol mcr
8:26am on 24/11/2012
Blue side -Starbucks UK buy their coffee beans from Starbucks Norway (think it's Norway) at a massively inflated price thereby making it look like their overheads in the UK are a lot higher than they really are. If our government were to plug this loophole, they would not shut down their business at all. They are making millions every year in the UK, do you really think they would shut up shop and loose the lot?