On Saturday 8th of December the activist organisation UK Uncut held demonstrations at “more than 40” Starbucks Coffee branches across the UK (44 apparently). UK Uncut have a history of activism against companies it considers to be ‘tax avoiders’. Previous “targets” have included Vodafone, Tesco, Barclays and Boots. UK Uncut has boasted that its goal is to protect the taxpayer-funded public services from cuts that the coalition government have said are necessary to reduce the public deficit. UK Uncut instead states that the shortfall can be met solely by clamping down on ‘tax avoidance’ by large companies.
This article is not going to debate the cuts, nor government claims they are necessary.
The Financial Aspects Of Starbucks ‘Tax Avoidance’
From UKUncut’s downloadable flyer:
“What’s wrong with Starbucks? Plenty. UK Uncut are targeting Starbucks over their tax avoidance, in the last three years they’ve paid no corporation tax at all, despite making sales of £1.2bn.”
Interestingly over four years the Guardian Media Group made comparable revenue (sales) and ‘paid no corporation tax at all’. In fact the group’s revenue from the four tax years 2009-2012 was £1.1bn. It made a cumulative £237.6m loss over this period and received total tax ‘credits’ of £30.4m (made up of refunds in three of the four years). This is a perfectly legal within UK tax law and would have been approved by Her Majesty’s Revenue and Customs (HMRC).
The flyer continues with this brilliant line: “Because of the way they’ve managed to shift money around inside their global corporate empire…” Empire? Who are they subjegating? Which countries did they invade? Can anyone hear Darth Vader’s theme tune now?
Next they say: “Starbucks has managed to pay no taxes by shifting money around between Starbucks companies in different countries, so that its accounts show it made a loss in the UK. As corporation tax is paid on profits, by recording no profits they weren’t due to pay any tax.”
Firstly: “shifting money around”, that is paying another part of the business for goods or services, in this case coffee beans and brand licensing (intellectual property). I would argue that without the coffee beans or the brand it wouldn’t be Starbucks.
Secondly: “its accounts show that it made a loss”. Correct, it made a loss. “…by recording no profits” – because there were none – “they weren’t due to pay any tax.” Correct – next statement of fact please?
So how do the international business experts at UK Uncut propose to deal with this? “The government can clamp down on tax avoidance by changing the UK’s tax rules to stop companies funnelling millions of pounds of profits out of the UK.” Well, sort of. While the UK government can enact legislation concerning corporation tax profits made here, there exist various tax treaties between countries, including the prevention of ‘double taxation’, that is tax charges being levied on the same profits in two countries of operation.
UK Uncut make this solution sound simple; it’s not. Even Paul Lewis, a financial journalist who frequently reports these tax arrangements on Twitter, has said: “The problem about legislating to stop these cunning cross border tax evoidance (sic) schemes is that it involves multinational agreement.”
Corporation Tax Is Confusing
Even worse, UK Uncut admits it has no idea how much tax is ‘the appropriate amount’. Danni Wright, representative of UK Uncut interviewed by the BBC, was unclear on how much tax Starbucks should be paying.
Interviewer: “How much tax do you think Starbucks ought to be paying? I asked your colleague this earlier and she couldn’t tell me. What, what figure do you think they should be paying?”
Danni: “They should be paying, um, you know, the, the appropriate amount. Part of the problem with the tax…”
Interviewer: “Well they’re paying the appropriate amount within the law, they would argue.”
Danni: “Well that’s the problem, you know, it’s about greater transparency of the tax system, stronger regulation and clearer signs from the government as to what the correct amount it.”
So the accusations are based on the fact that Starbucks pays the legally required and approved amount of tax as agreed between itself, its accountants and HMRC, the UK Government’s tax collector; but UK Uncut believes they should pay more. The Guardian, which has paid less tax than Starbucks on comparable revenues, also pays the legally required and approved amount of tax. So why the different approaches to these two ‘tax-avoiding’ companies, as UK Uncut would claim?
The Politics Of Envy
So why target Starbucks, a successful American-owned multinational brand? Is it possibly related to the brand’s inclusion in Naomi Klein’s book on anti-globalisation, No Logo, which criticises Starbucks for aggressive invasion (sic) of a region?
Google, Amazon, Apple and Microsoft, have also come in for criticism for the way they conduct their UK tax affairs, although strangely little has been said about these yet by UK Uncut; maybe they would struggle to survive without these, or is that criticism unfair? (Or should that be UK Unfair?)
Other targets have included the banks that were bailed out by the previous Labour government to the tune of £65bn, Lloyds Banking Group and Royal Bank of Scotland, and, strangely, banks that were not: Barclays and HSBC. The issue UK Uncut appears to have with these banks is that they pay their staff bonuses.
So it’s not just ‘tax avoidance’ – it’s wealth creation in general that upsets these activists. Whether its creators meant it to or not, UK Uncut has become a vehicle for the usual band of ‘anti-globalisation’ (i.e. anti-capitalists), such as Socialist Worker – as can be seen clearly here in this video; watch out for the prominent ‘Tax the rich’ signs at 00:10.
This group no longer has credibility, if it ever did, and its actions at Starbucks are reprehensible. The intimidation of customers and staff (often immigrant baristas) can be seen in this video; chants including “Starbucks: Pay your tax or we will shut you down” demonstrate their attempts at bullying the staff and customers into taking their business and labour elsewhere. It is often wrong on the facts of what has been paid and conversely it demonstrates no concept of what it thinks should be paid. It targets popular businesses but ignores others with similar tax profiles, such as the Guardian (with its similarly dubious approach to reporting corporation tax cases), demonstrating its inherent political bias.
So in summary: a movement that uses implied force, targets a foreign-owned business, but not a comparable organisation that aligns with its politics. Isn’t this how the brownshirts began their brand of revolution?
UK Uncut insists that Starbucks should pay some indeterminate higher amount of tax, not decided by tax legislation enacted by parliament, or enforced with the rule of law, but instead decided and coerced by the baying mob. Witness the politics of envy in action.