Haven't we already had enough of Starbucks's pie?

Rather mimicking the Leveson debate, whereby simplistic, bitter campaigners are attempting to mobilise national stupidity while Labour laps up every ounce of political capital it can, we now return to the great tax debate

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Haven't we already had enough of Starbucks's pie?
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Jonathan Bracey Gibbon
On 4 December 2012 17:47

There was some terrific lefty lunacy on the BBC (where else) on Monday. Rather mimicking the Leveson debate, whereby simplistic, bitter campaigners are attempting to mobilise national stupidity while Labour laps up every ounce of political capital it can, we now return to the great tax debate.

Corporation Tax is getting a hammering. Or rather it isn't, but the corporations who are avoiding it are. It is one of those stories beloved of both the Left and the Daily Mail Right as another example of austerity Britain favouring the rich at the expense of the poor…or something like that.

The latest miscreants are eBay, who are in good company along with Apple, Amazon, Ikea, Starbucks and (insert multinational here)…

Oh how we can chuckle at those Occupy bods who heavily patronise all these brands in their daily lives as they seek to smash the system, otherwise known as the ‘one percent’.

Of course it's an issue that the modern politician – and Len McCluskey – has found cause with which to engage, and as the PAC attempts to do its worst and make fools of its members in the process, pressure has been brought to bear and Starbucks has crumbled in the face of a manufactured morality of the times.

Despite its desperate attempts to cloak itself in corporate correctness, Starbucks is a brand that's hard to love. I recall working on a feature for the NASDAQ Magazine on its boss, Howard Schultz, back in the 1990s and struggled to hold down my Americano when reporting Schultz's philosophy of Starbucks being 'The Third Place' and such piffle – when in reality he was just a naked bean hawker with a weird brand.

One could be equally cynical about any rapacious corporation, and trotting down to Companies House to dig out the accounts of any multinational is easy pickings these days for any Owen Jones on the make. Worse, corporate tax avoidance is also meat and potatoes to Dacre's Mail.

But we're talking about Corporation Tax here. And that is a poor barometer of tax take from a corporation. And there's a theme. It's rather like students not understanding the student fees proposal. Or rather intending to not to understand the student fees proposal for reason of political expediency.

And why the Tories can’t argue this, is hard to divine. But then we are in an era where incompetence has replaced effective spin at Number 10.

Predictably, these companies have been criticised by the Unions, Labour, idiot Lib Dems, and wet Tories for routing profits out of Britain. It's naked theft, they bleat. A hospital here, a public sector bonus there, robbed by corporate tax evasion. Margaret Dodge, Michael Meacher, Liberal Conspiracy, some Lib Dem in Manchester, and Tories who should know better are rallying to the cause.

It is a tedious construct presented by those who don't get the concept that, in fact, corporations do not pay tax, people do. Any money paid has to come from someone. Talk of transfer pricing is now all the rage, but merely weeks ago would have drawn blank looks all round.

Occupy protesters hung out in Starbucks because they could get free Wi-Fi for their iPhones and iPads and bought the coffee and the 'third place' eco-drivel, precisely because Starbucks has paid, on average, around £620,000 annual Corporation tax for every year since it has been operating in the UK. All the while they have expanded and paid rates, national insurance and paid wages and tax. Those shareholders in this country who have benefitted through dividends and profit on share trading will have paid tax up to 40 percent on that activity.

Much has been made of similar avoidances. Of course those that bemoan legitimate use of the taxation system are equally ignorant of the benefits such laxity brings. Dump more tax on these corporations and they'll 'pay' it. And we will pay them in lower wages, higher prices, lower dividends and so on.

As Balls and his acolytes call for growth, the undeniable fact is that real investment will come from those very companies that seek to avoid corporation tax. The growth they, and we, could enjoy will inevitably lead to a tax take from their prosperity, rather than a somewhat arbitrary levy on just being. Of course, the notion of tax competition leaves an acrid taste in the mouth of those who believe corporations have a responsibility to society above and beyond that of shareholders.

This argument was being proposed yesterday by the way on Richard Bacon's show on BBC5Live, and Bacon was on the verge of screaming himself hoarse arguing that surely corporations had a moral duty etc. etc., so much so the contributor he had in the studio to argue the anti-avoidance line barely got a look-in.

The representative from the Institute of Economic Affairs could barely constrain his exasperation at the studenty posturing emanating from his host who had chosen to ignore those sums paid in VAT, NI, PAYE, rates, CGT on dividends and so on.

Later on, on Newsnight, Mark Littlewood, also of the Institute of Economic Affairs, completely demolished an absurd 'tax campaigner' – who displayed an amazing ignorance of, er, taxation – and the multi-captioned cleric and Occupier, Giles Fraser, who wanted a moral aspect to the tax code while brazenly admitting he would be clueless as to how that would look.

One could argue competition in taxation is a good thing. Keeping taxes down provides a natural break on government spending and as the Laffer curve shows, higher taxes bring in less money; too much tax equals tax avoidance. Furthermore in this day and age it is ridiculous for HMRC to waste millions on going after multinationals in the internet era when it is nigh impossible, not to mention expensive, trying to claw revenue from a transaction that may never have originated in this country in this first place.

If Balls was half as smart as he's meant to be, he'd call for Corporation Tax to be toast.

Jonathan Bracey-Gibbon is a freelance journalist who over the past 15 years has written for The Times, the Financial Times, The Sunday Times and Sunday Express

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