FAIRNESS AND MORALITY. What do they have to do with tax?
As much as it would seem easy to say ‘nothing', they can't be dismissed.
It's understandable that we can look at Starbucks and say that is unfair that it has paid barely any corporation tax in the UK over the past 15 years.
But is it immoral? Don't think so.
Call me mischievous, but I wonder if most of the public's ire is down to that fact that, without complex tax affairs of their own, they're not in a position to mitigate their own bills. No one in their right mind would hand over more than they have to. It's not that Starbuck's deserves a pat on the back for its actions, but without any moral arbitration and principles expertly enshrined within legislation, then companies will do what they have to do to keep their tax bills down.
For Starbucks to have apparently stepped forward to make a change to its structure seems like madness. It certainly should structure itself to not overpay tax. The question then becomes – if what it pays (or doesn't) is unfair, then what is fair?
Perhaps it has reached a tipping point where the furore will do it more financial harm than merely maintaining its current tax strategy. Perhaps the taxman has indicated it will again run the rule over Starbucks' tax affairs – or try and retrospectively target the ‘loopholes'. In that sense, corporate pragmatism continues to rule. Ironically, it would be the public that has stepped in where the government has failed miserably.
Is Starbucks a corporate angel? Well, it seems as if it's gone to great lengths to end up in a situation where it pays little UK corporation tax. Has the taxman done enough? Perhaps not – but it is merely an agent of government.
Let's talk about fair and unfair. Maybe it's unfair of Hodge, Gauke, Osborne and other publicly appointed representatives to blame others. They need to spend a bit more time navel-gazing, and accept that they need to work harder to enshrine 'fairness' and 'principles' into legislation.
So it will be fascinating to see if the GAAR can add fairness or morality-checking into the UK's tax framework. But if it creates uncertainty and complexity, then we might need something stronger than an espresso to protect investment into the UK.
Kevin Reed is editor of Accountancy Age and Financial Director
How much do Starbucks pay in employer's National Insurance Contributions? Their UK employees pay tax and NI contributions and are not a burden on the State. Is that not enough to be fair?
If they paid more to the Government, what chance is there that it would be spent constructively?
Posted by: CJM, 04 Dec 2012 | 10:54
Oh dear oh dear CJM. You need to update your mindset, it's thirty years out of date. It's stale neo-liberal propaganda. Governments are quite capable of spending the money constructively and wisely if properly advised. You need to remove blinkers and look around the world. There's plenty of evidence to support this contention.
Just remember corporates are not immune from spending unwisely! In fact many of them are currently on the economic life support of zero interest rates! Should that change....
Posted by: Theremustbeanotherway, 04 Dec 2012 | 13:47
I feel that MPs should not throw stones in glass houses. They enjoy, of thier making, tax free expenses when the rest of us would be taxed. Somebody should shout about this ironic situation. And, what about Margaret Hodge and her family company??
Posted by: JOHN KINLEY, 04 Dec 2012 | 16:22
Kevin Reed is right in that either HMRC have not been doing their job properly or the legislation does not enable this sort of problem to be tackled. Fairness starts to come into it when you realise that if Starbucks is US state domiciled then it would be subject to US taxation on its Worldwide profits with credit for any foreign (UK) tax paid. It comes own to whether Starbucks think it right that only the US should benefit or a fair benefit allocation is more appropriate. Reed conveniently ignores this.
Posted by: Graham Hirst, 05 Dec 2012 | 10:14
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