Starbucks hypocrisy beggars belief

Starbucks Coffee dodging tax as usual

We’re not closing in on the undeclared income of Starbucks

Note to Starbucks: we don’t want token gestures. We want the right tax in the right place at the right time. — Richard Murphy

Forget it guys. That solves nothing. No one asked you for voluntary box donations. We asked you to pay the right amount of tax in the right place at the right time. — Richard Murphy

Did Starbucks really think they could get away with paying a token amount of tax?

• Starbucks agrees to pay more corporation tax

Starbucks has offered to pay £10 million a year over the next couple of years, a total of £20 million. This is a pittance to what they have dodged over the last fifteen years.

The company’s UK Managing Director Kris Engskov:

Having listened to customers and to the British public, Starbucks in the UK will be making changes which will result in the company paying higher corporation tax in the UK – above what is currently required by law.

Specifically, in 2013 and 2014 Starbucks will not claim tax deductions for royalties or payments related to our intercompany charges.

Is this their idea of a sick joke? They claim to be listening. There must be a disconnect between their ears and their brains. They may be listening, but they are not heeding what they hear.

People are saying loud and clear: Pay your tax!

This is like being mugged, the mugger returning our mobile phone and then expecting us to be grateful.

If people were angry before, they are now outraged.

Starbucks are still maintaining the lie that they find it impossible to make a profit in the UK.

Tax Consultant Richard Murphy:

The reason why Starbucks has not been paying the right amount of tax in the right place at the right time is that it has put in place legal and accounting structures that have meant that the way it has been able to record its profits do not match with the underlying economic reality of the way it must make its money. So, royalties were being paid to reflect the supposed costs of creating new products and associated “intellectual property”. But no one, anywhere, thinks it costs 6% of turnover to know how to put water on coffee, mix a milkshake with a silly name or sell a chocolate brownie. So it was the structure that was wrong.

The same with the coffee beans: what was wrong was attributing the profit to the traders in Switzerland. It was the end customer who created the profit on those beans, not the dealer in Switzerland.

Since I was involved in the original Starbucks story (although Tom Bergin of Reuters is the complete star of this issue) I can tell you working out what was happening in this company was hard: they did all they could to obscure the realities of the economic substance of what was happening. Their accounts are as clear as mud: there aren’t any for Switzerland for a start. They’re just not available. So a lot of fevered effort went into fathoming out what is now known.

If Starbucks are unable to make a profit in fifteen years of doing business in the UK, why are they still here? Were they to leave, they would not be missed. Starbucks has 760 coffee shops across the UK.

Can an indie coffee shop over tea at HMRC negotiate away their tax, of course not, and neither should Starbucks be able to.

To put the £20 million in context, four Starbucks bosses have just awarded themselves a £50 million bonus.

• Four bosses of ‘unprofitable’ Starbucks get £50m reward: Largesse of coffee chain that hasn’t paid any UK tax in three years

What we need is not token tax payments, but real change, transparency and payment of fair share of tax.

If a company operates in the UK, then it should expect to pay UK tax. If not, then it is not wanted.

• Starbucks stands accused not only of serving rubbish coffee but dodging tax

Starbucks will say they create jobs. Jobs with lousy working conditions. Starbucks is now forcing its workers to sign new contracts with even worse working conditions.

• Appalling working conditions at Starbucks

Richard Murphy has suggested the following:

• Full country-by-country reporting that will tell us for each and every country where Starbucks works what is made, what costs are, how much is paid to staff, what the profit is, what taxes are paid and critically how much of all of this is down to intra-group rather than genuine customer trading.
• A blow by blow explanation of tax actually due and paid: not accounting numbers but real numbers too.
• A commitment to make tax payments where profits are really earned – which is where the end customers are, where people are employed and where the real assets (stores mainly in their case) are.

If Starbucks think they can get away with coughing up what is little more than loose change as a token tax payment, then they are sorely mistaken.

Starbucks is now a toxic brand. A coffee at Starbucks is akin to associating with known criminals.

Starbucks is to be occupied Saturday 8 December 2012. If there is not an occupation organised at a Starbucks near you, then please help organise one.

• Occupy Starbucks and smell the hypocrisy
• Note to Starbucks: we don’t want token gestures. We want the right tax in the right place at the right time
• Starbucks’ ‘hollow promises’ won’t stop public outrage

Tags: coffee, hypocrisy, Starbucks, Starbucks hypocrisy beggars belief, tax, tax avoidance