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Saying This, Doing That (2)



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The Hill, Dec 29, 2012

Starbucks is expanding a campaign to encourage Congress to reach a “fiscal-cliff” deal. Baristas at a number of Starbucks locations in Washington, D.C., have been writing “Come Together” on coffee cups to encourage lawmakers to reach a deal ahead of the year-end deadline to prevent tax-rate increases and spending cuts. A spokesman for the coffee chain said Friday that the company would be expanding its effort to locations outside of Washington.

The Economist, Dec 15, 2012

“This is an unprecedented commitment,” said Kris Engskov, the boss of Starbucks in Britain and Ireland, on December 6th, announcing that the coffee retailer will volunteer to the British taxman around £10m ($16m) a year more in 2013-14 than it is required to pay by law. It is doing so not under any pressure from the authorities, which had not been party to the firm’s decision to donate an extra shot of cash to the exchequer, but to please British consumers furious not, as you might expect, at the high price of a latte, but at how little tax the firm pays in their country. “We’ve heard that loud and clear from our customers,” said Mr Engskov.

Alas, this pioneering effort to transform tax into a marketing expense did not elicit the hoped-for gratitude. On December 8th UK Uncut, a group which campaigns against government austerity and corporate tax avoidance, staged protests at dozens of British Starbucks stores.

On December 8th UK Uncut, a group which campaigns against government austerity and corporate tax avoidance, staged protests at dozens of British Starbucks stores. Campaigners point out that since first opening its doors in Britain in 1998 Starbucks has paid only £8.6m in corporate income taxes there. In testimony last month before a parliamentary committee, Starbucks had said this was because it had made a profit in only one year in Britain, though it also admitted that its British business had made large payments for coffee to a profitable Starbucks subsidiary in Switzerland and large royalty payments to another profitable subsidiary in the Netherlands for use of the brand and intellectual property….

As I noted earlier, a company’s management’s duty is to its shareholders. If a company can take advantage of (legal) tax avoidance measures it should (if I were a shareholder in Starbucks I wouldn’t be too pleased about that voluntary payment), but it would be nice if it could spare the rest of us pious lectures on the topic of chipping in.

Oh yes, there’s this:

Although Starbucks denies using tax havens, it admits to having negotiated a secret low rate of tax with the Dutch taxman for its subsidiary in Amsterdam.



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