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Coffee House

Starbucks protests: We need political power to reform the tax system

8 December 2012

4:56 PM

8 December 2012

4:56 PM

UK Uncut is holding its day of action against Starbucks today, with more than 40 demonstrations across the country in the chain’s coffee shops. The group’s sit-ins aim to highlight the chain’s tax avoidance strategy which has led to it paying just £8.5m in corporation tax since 1998, despite sales of £3bn in the UK.

While it’s not a bad thing that tax avoidance is moving up the agenda, there are probably more fruitful ways that those irritated by tax avoidance can spend their time, rather than making life a bit awkward for some poor barista who has no involvement in their employer’s tax affairs. It’s worth reading this debate between City AM’s Allister Heath and UK Uncut’s Ellie Mae O’Hagan, where Heath, while accepting that UK Uncut’s ‘protests have been very successful’, points to the real root of the Starbucks problem. He tells O’Hagan:

‘People should be protesting at MPs. All these politicians grandstanding on select committees, saying they’re disgusted – well, wait a second – they’re the ones who voted through finance acts. They’re the ones who voted for budgets. So why can’t they take responsibility and change the law?’

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Covering the Public Accounts Committee’s hearings on tax avoidance, the most frustrating thing was that the MPs interrogating HMRC, Starbucks and others seemed as keen on registering their disgust about tax avoidance, possibly for a nice little press release after the hearing, as they were on the overall picture. Margaret Hodge, a fierce interlocutor, was equally keen to tell the Today programme about her boycott of Starbucks and that she wasn’t using her Kindle any more, even though the firms involved are operating within the law.

Even the small ‘victory’ this week that Starbucks will now pay £20m in corporation tax over the next two years wasn’t enormously heartening as there are always going to be new ways for other companies – including Starbucks, once those two years are up – to drive down their tax bills perfectly legally using Britain’s Byzantine tax system. The people power that drove Starbucks to make its announcements should now turn its attention to political power pushing for reform of the whole tax system, not a make-do-and-mend policy where a loophole is sewn up here, and another avoidance scheme darned away there. Fraser outlined what that reform would look like in a recent column, arguing that a flat tax would remove the hiding places for tax dodgers, and remove the incentive to avoid tax, too.

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