Fri, 07 Dec 2012
Starbucks and Tax

I like Starbucks. It's often a comfortable place with friendly staff. Coffee is usually OK as well.

I posted about tax avoidance recently and have stopped using Starbucks as a small protest. Today, there are reports that Starbucks have decided to "volunteer" extra tax to us. And as mentioned in the article linked above in the Daily Telegraph, Starbucks uses "perfectly legal mechanisms" to reduce its tax bill.

Technically, this might be so, but as Richard Murphy says :

Let me reiterate what tax avoidance is. It is getting round tax law to obtain an advantage parliament did not intend. So it is not paying money into a pension within allowed limits or subscribing for an ISA. Parliament intends those reliefs. It is instead finding loopholes and discrepancies in and between tax and accounting laws either in the UK or between the UK and other places so that income falls out of the UK tax net.

It is, of course, often said that tax avoidance is legal. I dispute that. Correctly it is not illegal. But nor is it sanctioned by parliament. It is in a grey area where the law is in doubt, and very often the application of law is, in the absence of a general anti-avoidance provision, also in doubt. That is precisely why this is a moral issue. When the application of law is uncertain, and it can be, morality has to take its place as a guiding principle as to right action. The inclusion of morality in tax debate is appropriate for precisely this reason.

As he says, paying tax is not like a charitable donation, a voluntary gift. Let's see how things go and I am glad Starbuck's is paying attention. I think the only option to make things work will end up being done at government, or hopefully international, level however. A glocal fix rather than a local or individual "fix" (that wouldn't be).