Starbucks: deVere Group and other tax avoidance apologisers must know we want the law changed

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Category: The UK Economy News

Published on Tuesday, 04 December 2012 11:45

Written by Gary Howes

This piece was prompted by deVere Group who continue a high-tempo defence of Starbucks Corporation (NASDAQ:SBUX) and other multinational corporates over their fondness for UK corporate tax avoidance.

deVere Group chief exec Nigel Green says that companies should not pay a penny more than they are required to:

"Should Starbucks pay one penny more in tax than they are lawfully required to, simply because of pressure from a committee of politicians, it sets a serious anti-business precedent," says Green.

Green is right in saying firms should only pay what they are legally obliged to pay.

But, the law must be changed.

Green deftly deflects the issue away from Starbucks and sets up that familiar theme of bad politicians bent on destroying British business, most likely an attempt to realign public opinion with the likes of Starbucks.

However, he is being disingenuous by ignoring the fact that politicians only act when the media and general opinion prompt them to.

The current mood amongst the public, media and now politicians is wholly justified, on moral and practical grounds, of which we could argue at length.

But for me, the implications of this aggressive tax avoidance are incredibly anti-business, just not in the sense that deVere Group argue.

Laws must be introduced to close the competitive gap that exists between companies that operate on the global stage and are able to deploy fantastical tax avoidance schemes and those companies that are restricted to the high-street.

The system is highly disadvantageous to those smaller companies that are unable to mobilise vast amounts of capital to buy the consultants and lawyers that allow them an edge over their competitors.

Business owners up and down Britain would clamour for a reduction in their tax liabilities equivalent to the corporation tax amount.

And so it is that Green and his deVere Group are right to bring up the 'anti business' issue - but I argue that the unfair advantage that this tax avoidance brings is actually the real 'anti-business' element.

It is of course imperative that changes are conducted on a global scale, consensus must be sought across Europe at the very least, and only politicians can do this.

I would suggest this is even a case for the infamous European Commission which adjudicates on issue of competition.

And anyone who would forward the empty threat that Starbucks would pull out of the UK market is laughable; the UK is clearly profitable to the coffee chain and as long as there are profits to be made Starbucks will stay.