Demos pay off Starbucks set to pay tax – at last!

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The tax-avoiding multinational coffee giant Starbucks has bowed to pressure from angry consumers

‘People power’ through resistance from customers has caused a quick change of the global coffee giant attempts to ward off a backlash over its accounting methods.

The company, which has paid just £8.6million in corporation tax in the UK over 14 years – and none in the last three – is seeking to deflect a consumer boycott and increased taxman scrutiny by voluntarily increasing the amount it pays. Observers are watching to see if other international corporations, who have paid little or no UK tax, such as Google and Amazon, will take similar action. There has been a wave of spontaneous protests throughout the country, such as this one in Southport by John Pugh MP and local Lib Dem councillors iain Brodie Browne and Tony Dawson.

Parliament’s public accounts committee is set to issue a report blasting the tax avoidance schemes which US multinationals operating in the UK use.

Starbucks, which has more than 700 outlets in Britain, has suddenly felt obliged to meet with HM Revenue & Customs officials to discuss increasing the amount of tax it pays. A spokesman said they feel the need to increase public trust. Previously, Starbucks had been paying a ‘royalty fee’ to a sister company in Holland for the right to use the Starbucks brand and recipe, allowing it to benefit from the Duch tax regime. This move (completely legal) helped Starbucks sidestep an estimated £5m UK corporation tax bill last year.

In a statement, Starbucks said:

‘We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more. As part of this, we are looking at our tax approach in the UK. The company has been in discussions with HMRC for some time and is also in talks with The Treasury. We will release more details later in the week.’

The Chancellor will announce extra investment to crack down on tax avoidance by global companies with British operations, he said on TV today – and he also plans to bolster the Inland Revenue team that deals with multinationals. He is also to work more closely with Germany and France to bring better rules to tackle avoidance of tax onto the international table. This will be made a big priority for the G7 and G8 conference which will be hosted in Britain next year.

Starbucks has been able to pay handsome wages to its most senior staff over the past three years. Finance chief Troy Alstead, who owns £6.8 million of shares, was paid £5.7 million and founder Howard Schultz received £33 million – he also owns shares in Starbucks worth £545 million. Former UK boss of Starbucks Cliff Burrows, who now oversees the firm’s Americas operations and has shares worth £7.2 million, earned £6.5 million. UK director John Culver was paid £3.8 million over two years and owns £4.7 million in shares. Bosses of Google, Amazon and Starbucks, who were recently grilled by MPs over how they managed to pay little or no corporation tax on their UK operations, all denied they were engaged in aggressive tax avoidance.

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