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?

Column LAST UPDATED AT 08:45 ON Fri 16 Nov 2012

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. · 

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If the tax laws are unsatisfactory, why the delay in changing them?

Firstly it's a European problem. We should either be a United states of europe with equalised tax regimes all run by a central bank, or not. Big companies are just taking advantage of our half-heartedness. Either equalise all tax or somehow force all companies to pay tax in countries where they have sales.
Secondly it's an 'admin' fee problem. Most Starbucks branches in Britain are franchised and a large part of the profit gets paid, pyramid style back to HQ. Boycotting them just kills off British people's businesses. HQ then pays money elsewhere for 'admin' costs leaving it with no profit. How do you differentiate between a charge for a legitimate service paid abroad and a charge for a fake service or charge which exists purely as a means of avoiding tax?

is she going to boycott the pie shop?

"Harpie" Harman with yet another bee in her bonnet - Starbucks must be trembling in their boots!

Cafe Nero and tens of thousand of independent coffee shops are also British businesses and in the whole, (I'm sure) pay tax. I agree with the boycott.

The "pitiful" one was Harriet The Screeching Harpy who apparently never listens to her own nonsensical babblings. Why would anyone or any business pay "taxes" they don't owe - by law? And what gives this sanctimonius twit the right or reason to make paying un-owed taxes a Moral Issue? The failing is in Harriet and her fellow dim-wits being unable to establish tax laws that cover whatever the hell it is she's wanting taxed. Last I heard, taxes weren't some kind of voluntary, give until it hurts morality test. I surely hope her idiotic boycott goes as well as those in the US against Chik-Fil-A and Papa John's Pizza, instigated by Leftists like Harriet in an attempt to crush free speech rights. Last checked, it had increased the "targets" sales significantly. Hope for the same at Starbucks.

This Government will not change the tax laws - neither would Labour or Lib Dems - I have shown all of them that the Major banks in this country pay no tax on receiving fees from financial transactions from abroad - that's millions of transactions a day and they are all guilty of a big cover up. The banks admitted to me they pay no tax on receiving fees after passing it through their legal dept. There is a cartel that removes the money before it enters the UK and their experts say that this makes it an international payment and therefore not liable to UK tax - I gave this info to the Government Minister Mark Hoban and instead of passing it to HMRC he got Lloyds to change their story. So the select committee harassing Starbucks etc is a sham to get u to believe they are doing something - don't believe it - only you and I will be chased by tax man - I reported these facts to FSA and HMRC, but the government just blocks investigation neither even asked for my evidence - Why didn't Guy Fawkes succeed