Starbucks 'treats tax like a church collection plate': Treasury chief secretary attacks coffee chain
Danny Alexander, Chief Secretary to the Treasury, said today paying tax ‘is not a voluntary choice’
Anger that coffee giant been allowed to cut a deal and pay a 'voluntary' 10million a year
Anti-tax demonstrators protested outside more than 50 Starbucks coffee shops across the country this weekend
23:56 GMT, 9 December 2012
Tough talk: Danny Alexander, Chief Secretary to the Treasury, said on The Andrew Marr show that the Government would clamp down on companies that dodge tax
Starbucks was accused of treating its tax obligations ‘like the church collection plate’ yesterday as the backlash against the coffee giant intensified.
A Cabinet minister weighed into the row over the chain’s surprise deal with the taxman to pay a ‘voluntary’ 10million a year in tax.
The agreement, revealed last week, followed weeks of damaging publicity about the American-owned company following revelations it had not paid any corporation tax in Britain for three years.
But critics are furious Her Majesty’s Revenue and Customs have allowed the coffee giant to cut a deal with the taxman. MPs said the unusual arrangement risked turning Britain’s tax system into a ‘farce’.
Yesterday Danny Alexander, Chief Secretary to the Treasury, insisted paying tax ‘is not a voluntary choice’ for corporations and insisted ‘it is not something you can just chose to do willy-nilly because you think it will please your customers, it is an obligation’.
He insisted the Government would get tough on firms such as Starbucks, Amazon and Google who structure their financial affairs to dodge tax.
‘Thinking of the tax system as if it is like the church plate going around on a Sunday morning is completely the wrong way to think about it,’ he told the BBC’s Andrew Marr programme.
But Boris Johnson, the Mayor of London, leapt to the coffee chain’s defence – condemning the ‘sneering’ and saying it had a duty to shareholders to minimise the level of tax it pays within the law.
Huge pressure is mounting on HMRC to close the loopholes which allow multinational firms such as Starbucks to avoid paying what is seen to be their fair share of tax.
George Osborne last week announced a
clampdown on tax avoidance by multinationals and the rich to plug a
32billion a year tax shortfall between what HMRC is due and what it
Anger: Protesters gathered outside Starbucks on Euston Road in London yesterday to demonstrate against the coffee giant
His move followed a devastating report by MPs which singled
out Starbucks, Amazon and Google for paying extremely low tax rates by
basing themselves abroad.
Starbucks, based in Seattle, has more than 700 outlets in the UK, generating revenues of more than 3billion.
But it paid just 8.6million in
corporation tax in its 14 years of trading in the UK and nothing in the
Under fire: The international coffee chain paid just 8.6million in corporation tax in the UK over the past 14 years
Its 20million ‘donation’ has been widely branded a ‘PR
stunt’ – and did nothing to stop protests by anti-tax avoidance
demonstraters at more than 50 Starbucks coffee shops across the country
at the weekend.
But Mr Johnson defended the chain,
saying it had a duty to pay the minimum tax it could, although he
accepted Starbucks was in a ‘hell of a mess’.
He said: ‘Imagine you are the
corporate finance director of one of these companies. Your job is to
look at the law as it stands. Your fiduciary duty to your shareholders
is to minimise your tax exposure.’
Veteran Tory backbencher Bill Cash
said the voluntary contribution from Starbucks was ‘a farce’, adding it
could lead to a form of ‘democratic anarchy’ after the public ‘bullying’
of the chain.
Sarah Greene, a UK Uncut activist
said: ‘It is an outrage that the Government continues to choose to let
multinationals like Starbucks dodge millions in tax.’
Microsoft was dragged into the tax row amid claims it avoids paying UK corporation tax on more than 1.7billion of revenue.
Reports suggested a small office in
Luxembourg handles hundreds of millions of pounds of online sales in
Britain and Europe.
The bulk of the money is then transferred to
Microsoft’s European HQ in Ireland – putting the cash out of the reach
of the British taxman. Microsoft said it ‘pays all due taxes’.