[governance] FW: [TriumphOfContent] Starbucks wakes up and smells the stench of tax avoidance controversy (are Google, Amazon and eBay next...

Wed Nov 14 02:53:54 EST 2012

From: TriumphOfContent at yahoogroups.com
[mailto:TriumphOfContent at yahoogroups.com] On Behalf Of Anjana Basu
Sent: Tuesday, November 13, 2012 10:36 PM
Subject: [TriumphOfContent] Starbucks wakes up and smells the stench of tax
avoidance controversy

Starbucks wakes up and smells the stench of tax avoidance controversy

Cafe chain executive to face questions from MPs, while protesters plan to
turn branches into creches and refuges

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*	 <http://www.guardian.co.uk/profile/simon-neville> Simon Neville and
<http://www.guardian.co.uk/profile/malik-shiv> Shiv Malik

*	 <http://www.guardian.co.uk/theguardian> The Guardian, Monday 12
November 2012

 Starbucks
<http://static.guim.co.uk/sys-images/Guardian/Pix/pictures/2012/11/11/135266
3855495/Starbucks-010.jpg> 

Police protect a Starbucks branch during an anti-cuts march last month after
the company's low tax bill was revealed. Photograph: Suzanne
Plunkett/Reuters

On an average day its outlets are a hive of social activity, hosting
everything from business meetings to reading groups looking for that
all-important appointment with a morning caffeine rush, approvingly
overlooked by a branded community bulletin board. But
<http://www.guardian.co.uk/business/starbucks> Starbucksshould be careful
what it wishes for.

The direct action group  <http://www.ukuncut.org.uk/> UK Uncut plans to turn
dozens of the coffee empire's UK branches into creches, refuges and homeless
shelters to highlight the
<http://www.guardian.co.uk/business/2012/oct/15/starbucks-tax-uk-sales>
chain's tax avoidance tactics.

The announcement of the action comes on the day a Starbucks executive faces
questions from the House of Commons public accounts committee over why the
company paid no corporation tax in the UK during the past three years,
despite senior US management trumpeting the company's profitable operations
in Britain.

MPs will also question management representatives from Google and Amazon,
both of which have faced criticism for basing their European operations in
countries that have lower tax rates such as Ireland and Luxembourg.

In his appearance before the committee, Starbucks' chief financial officer,
Troy Alstead, will attempt to repair the company's reputation, which,
according to research by YouGov, continues to suffer because of the
controversy.

In a similar session last week, MPs accused HM Revenue & Customs (HMRC)
officials of having cosy relationships with big businesses. Speaking about
the arrangements with Starbucks, the Conservative MP Richard Bacon said: "It
smells  and it doesn't smell of coffee. It smells bad."

 <http://www.guardian.co.uk/uk/uk-uncut> UK Uncut has said it will start
targeting Starbucks on the Saturday following the autumn statement by the
chancellor, George Osborne, on 8 December. The campaign group is attempting
to draw a link between government cuts, in particular those that affect
women, and  <http://www.guardian.co.uk/business/taxavoidance> tax avoidance
by multinational businesses.

Sarah Greene, a  <http://www.guardian.co.uk/uk/uk-uncut> UK Uncut activist,
said funding for refuges and rape crisis centres faced cuts unless companies
paid their fair share of tax. HMRC estimates around £32bn was lost to tax
avoidance last year.

Greene said the government could easily bring in billions that could fund
vital services by clamping down on tax avoidance, but was instead "making
cuts that are forcing women to choose between motherhood and work, and
trapping them in abusive relationships".

The group, which
<http://www.guardian.co.uk/uk/video/2011/feb/10/uk-uncut-protest-movement>
rose to prominence after staging a sit-in at Vodafone stores, Sir Philip
Green's Topshop and Fortnum & Mason, turned its attentions to Starbucks last
month after an investigation by Reuters discovered the company had paid only
£8.6m in corporation tax since launching in the UK 14 years ago, despite
cumulative sales of £3bn.

Longstanding Uncut campaigner Anna Walker said the group wanted to
"galvanise the anger" that women were feeling: "We've chosen to really
highlight the
<http://www.guardian.co.uk/lifeandstyle/2012/mar/30/women-paying-price-osbor
ne-austerity> impact of the cuts on women this time. So there is going to be
a real focus on transforming Starbucks into those services that are being
cut by the government 
 [such as] refuges and creches," she said. 

Walker said the campaign group had been in touch with women's groups across
the country in the lead-up to the direct action event and believed that,
along with a pre-established network of activists, dozens of the company's
coffee shops were likely to be targeted.

"Starbucks is a really great target because it is on every high street
across the country and that's what UK Uncut finds really important: people
can take action in their local areas," she said. "We're really hoping that
women who are impacted by the cuts, who are seeing their Sure Start centres
where their kids go being reduced in services, and people who use refuges,
[will] be involved."

Several international organisations have faced criticism over their UK
accounts, with
<http://www.guardian.co.uk/technology/2012/apr/04/amazon-british-operation-c
orporation-tax> Amazon, eBay, Facebook, Google and Ikea all paying little or
no corporation tax despite large British operations.

However, according to pollsters at YouGov's BrandIndex, Starbucks has
suffered the deepest damage to its image.

The organisation, which records the strength of companies' brand identities,
revealed Starbucks' cachet plummeted following the tax revelations and
continues to languish at near-record lows.

Its "buzz" score, which measures the number of negative and positive
comments customers have heard, hit -16.7. That is only slightly higher than
the lowest levels it hit during the most heated point of the controversy
last month, at -28.6. A year ago its rating was at +3.1.

By comparison, Google and Amazon  both due at the select committee  have
seen their ratings seemingly unaffected.

UK BrandIndex director Sarah Murphy said: "A brand's buzz score typically
recovers quite quickly following a spate of bad press, but we aren't seeing
that with Starbucks, which is quite unusual. Its scores started to level out
around the end of last month, but whatever modest recovery Starbucks has
made could well be in jeopardy if this story flares up again in the media."

The coffee store chain
<http://www.guardian.co.uk/business/2012/nov/01/starbucks-dismisses-tax-avoi
dance-claims>  insists it pays the correct level of taxes. The group chief
executive, Howard Schultz, has said in a statement: "Starbucks has always
paid taxes in the UK despite recent suggestions to the contrary.

"Over the last three years alone, our company has paid more than £160m in
various taxes, including national insurance contributions, VAT and business
rates."

However, MPs will no doubt point out that VAT is paid by the customers at
point of sale and collected by Starbucks.

Margaret Hodge, who chairs the public accounts committee, told parliament
last month that Apple, eBay, Facebook, Google and Starbucks had avoided
nearly £900m of tax. The prime minister, David Cameron responded to the
claim by saying: "I'm not happy with the current situation. I think [HMRC]
needs to look at it very carefully. We do need to make sure we are
encouraging these businesses to invest in our country as they are but they
should be paying fair taxes as well."

A spokeswoman for Starbucks said on Sunday: "While the subject of tax law
can be extremely complex, Starbucks respects and complies with tax laws and
accounting rules" in each of the 61 countries where we do business,
including the UK  a market that we remain committed to for the long term.
We've posted the facts about our tax practices in the UK on our website .

"Starbucks' economic impact in the UK spans far beyond our stores and
partners (employees). We spend hundreds of millions of pounds with local
suppliers on milk, cakes and sandwiches, and on store design and
renovations. When you take into account the indirect employment created by
Starbucks' investments in the UK, the company's extended economic impact to
the UK economy exceeds £80m annually.

"We hope that UK Uncut will respect the wellbeing of our partners and
customers, and recognise the value that we add to the economy, creating jobs
and apprenticeships, as well as paying our fair share of taxes in the UK."

http://www.guardian.co.uk/business/2012/nov/12/starbucks-tax-avoidance-contr
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