I have not looked at the details of what exactly the likes of Starbucks are doing, but if it is legal it is legal. So what is the problem?
I can understand calls to change the law if something completely legal is felt by the public at large to be wrong in some way. But that does not appear to be what people are after. They seem to think that Starbucks should pretend the law is different and pay tax as if it was.
Lets get this straight - the purpose of a company is to act in the best interests of the company members (i.e. shareholders). If the directors have a choice of how they structure the companies finances and operations such that they make more for the shareholders in a way that is totally legal, then they have an obligation to do that. Indeed, if shareholders found that directors were choosing not to make best use of tax laws then the directors could be breaking the law. Companies are not charities - they are there for their shareholders.
If anything is wrong here it is the way the tax legislation has been written, not the fact that a company is doing what companies are meant to do!
It is odd, when there were plans to classify pasties such that they have VAT when they did not before, everyone is up in arms. The idea that pasties not having VAT could be a tax loophole that people are exploiting was never voiced.
Some would argue the lack of VAT on jaffa cakes is a clear loophole, but people don't offer to pay HMRC the VAT whenever they buy a packet, or call for the manufacturers to voluntarily hand over more tax.
Now, the VAT on a jaffa cake or a pastie is a small amount and helps everyone that buys them. Seems not to be the same issue as Starbucks? Well, if Starbucks pay lots of tax, what does that mean? I means some (more than now) of the price of your coffee from Starbucks is going to pay that tax. So it is the same thing. People buying coffee clearly want to pay more for their coffee so that some of that money goes to pay tax. People asking to pay more tax. Seems odd somehow to me.
Everyone is happy when it is themselves that are making the most efficient use of tax law, but the idea that someone else may be doing that is somehow offensive and they call it a loophole.
Update: Some of my comments from facebook - argument that jaffa cakes are irrelevant:-
Both are marginal "tax loopholes" designed to avoid paying tax. They are different loopholes and different amounts of money, but they are the same issue. If, as it seems to be the message of the campaigners, exploiting a "tax loophole" is wrong, then Gregg's and McVitie's are in the same boat as StarBucks. In general, a principle, like "exploiting tax loopholes" is not changed as a principle simply by the value of the exploit. It is the principle that matters, surely?
To be clear here, we need laws that work to allow HMRC to collect enough tax to allow us to run the country, and collect from companies and people in a way that is effective and (ha, nice word) "fair". If we have laws that fail in doing that, we need to change those laws.
However, we also have laws that make companies, by design and by law, selfish. Laws that mean companies are obliged and expected to take all steps they can (legally) to benefit the shareholders. So what starbucks is doing is what we expect a company to do, by design. Getting upset with starbucks is wrong. It is the wrong target, assuming what is happening is somehow "wrong". The correct target in such case is the law and making changes to that.
You could argue companies should not be designed like that, which too would be a change of law, but we do allow choices of companies (charity, co-op, non profit, or normal) and we allow consumers to choose who they buy from. So we pretty much have that covered.
If consumers choose to buy from a normal company that is there to benefit its shareholders, they should not be surprised when the company does just that, within the law.
It is also worth pointing out that regardless of corp tax, starbucks will be paying VAT and employers NI and rates and other ways in which companies hand over lots of tax to the UK. My corp tax bill is small compared to what I pay in NI and VAT... So they have not avoided all tax, they have reduced what they pay here.
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