Harriet Harman leads boycott over Starbucks tax avoidance
Can people power force multinationals to start paying reasonable taxes? And who will a boycott really hurt?
HARRIET HARMAN, deputy leader of the Labour Party, announced last night on Question Time that she is going to take unilateral action over the failure of the multinational companies to pay their taxes – she's going to boycott Starbucks and buy her morning cappuccino elsewhere.
Harman's decision follows the pitiful appearance on Monday of Starbucks, Amazon and Google executives before the Commons public accounts committee – a public spending watchdog – chaired by Labour MP Margaret Hodge.
To the disbelief of cross-party MPs, Starbucks' chief financial officer Troy Alstead explained that Starbucks paid almost no tax in the UK because it made no money here. As The Guardian's sketch writer Simon Hoggart observed: "Year after year, the business failed. Yet somehow it survived, and the UK boss was even promoted! What a charity Starbucks is!"
Harman's boycott bandwagon already has momentum. The bosses of John Lewis and Dixons have both called on the Treasury to plug the tax loopholes that leave their stores at a disadvantage. Andy Street, MD at John Lewis, says the chain could be driven out of business because Amazon is able to undercut it, so much does it save in taxes. Sebastian James, CEO at Dixons, tweeted yesterday: "I agree with Andy Street: retailers making profits in the UK should pay tax in the UK."
People power could yet force the big three companies – and others who pay virtually no tax on huge profits in the UK – to volunteer to pay more to the Treasury for moral reasons.
The row was sparked by a four-month investigation by news agency Reuters which revealed that Starbucks allegedly paid just £8.6m in corporation tax in the UK over 14 years. The company even reported accounting losses when it was profitable.
Hodge's committee is almost certain to demand that the Treasury does more to create a level playing field in the UK by ordering the Revenue and Customs to take a more robust view of the multinationals' fancy and entirely legal tax avoidance scams (sorry - I mean schemes).
But before we all rush to join Harman's populist bandwagon, there is a twist...
A member of the Question Time audience said a boycott would unfairly hit himself and hundreds of other small businesses who run Starbucks outlets on franchises and aren't tax dodgers.
The Starbucks coffee shop owners and their staff all pay full income tax in the UK. The tax avoidance schemes apply only to the royalties they pay to Starbucks.
So, before Harman sets off to Caffe Nero or Costa or wherever, she might want to look her local Starbucks staff in the eye and what it will cost them if she moves her cappuccino business elsewhere.