Boycott Starbucks... if it caves to left-wing pressure

Starbucks's business model creates jobs, investment and is morally defensible. The government's model however, is not...

Starbucks has nothing to prove
On 7 December 2012 10:48

Sitting here with an Eggnog Latte and a slice of Ginger Loaf, it is easy to imagine why I might be sympathetic to the plight of Starbucks. Yes, I said it – the plight.

But it’s not the stale baked goods or the sub-standard coffee that made me take a trip to the coffee chain under fire today. It was intrigue.

I wanted to see how many staff my local branch had on hand during rush hour. Suffice to say – not enough.

And this situation won’t in any way be alleviated by ‘morality’ enthusiasts who demand that the chain pay its ‘fair share’ of tax in the United Kingdom.

(Fairness, by the way – by whose standards?)

The rebuttal will come of course, “If Starbucks had the intention of re-investing in Britain, it would not repatriate profits elsewhere to make it look like the UK branch made no money”.

This is a stupid argument that assumes once money has left the country, it never returns in the form of capital investment or otherwise. The money a firm saves by avoiding taxes is of course re-invested, either into the business itself, its employees or its shareholders – at a much higher rate than it would have been able to if it were not avoiding the burdensome state.

But what the carping commies propose is the transfer of money, theoretically and practically, between an efficient actor and an inefficient actor – from business to government. This assumes that government can and does utilise money in a more ‘fair’ and efficient manner. This is fundamentally untrue.

I must declare an underlying selfishness in my defence of Starbucks’s tax avoidance measures – I want my coffee faster.

It is evident that if Starbucks opts to; create fewer jobs as a result of this moral penalty, train and pay its staff less, buy cheaper equipment (which of course are all likelihoods rather than possibilities), then the consumer and the employees suffer. In return, the Treasury suffers.

If Starbucks is less frequented, or pays its staff less, then Mr. Taxman has problems. Farmers, wholesalers, delivery firms and even The Independent, which sells its newspapers in Starbucks branches, will suffer. The knock on effect, while currently intangible, is likely to be more than then £20m that the likes of the hypocritical Margaret Hodge MP have welcomed.

What may be even worse for the leftist coalition that has demanded more cash from the coffee giant is if Starbucks decide that in having to pay more tax to governments, it must slash money from its corporate social responsibility department. That means no more fair-trade coffee, no more recycling, no more ethical sources and excitingly, no more ‘forest carbon programs’ (which actually do less to help the rainforests and more to throttle local businesses anyway).

Another question arises: If what Starbucks is doing is entirely legal, but ‘immoral’ in the eyes of some left-wing campaigners and Members of Parliament, then what exactly would be ‘moral’? When Starbucks pays the standard rate of corporation tax? Well if that’s the case – enshrine it in legislation. If it’s not as simple as that (which it’s obviously not), then it’s about time our politicians were honest with the public about the complexities of attracting business to the United Kingdom – and the benefits of loopholes.

It smacks of hypocrisy that on the one hand, Britain welcomes with open arms, tax-avoiders from abroad, as David Cameron recently did to French wealth-creators – and on the other hand, lambasts firms who find it cheaper to do business outside of the UK. Only this week it was announced that Britain will be lowering its rate of corporation tax, a figure which by 2014, will have fallen seven percent in the past four years. A good thing, of course.

Either Britain competes effectively in what is really a global market for business, or it suffers. But lecturing on the immorality of tax avoidance on the one hand, while attempting to lure in those from abroad on the other is simply disingenuous. And worst of all, I’m terrified of having to wait a minute extra for my red cup.

Raheem Kassam is the Executive Editor of The Commentator.

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