Multinational firms like Google, Amazon, and Starbucks are coming under new pressure in the UK to pay their fair of corporate taxes as a result of pressure from tax fairness campaigners who have gained the support of British lawmakers who have picked up the call that tax avoidance by some of the world's wealthiest companies is as much a moral issue as an economic one.
News was specifically charged around Starbucks on Monday, after the US-based coffee giant announced they would "review" their tax policies in the UK and potentially start paying taxes on their profit there. As the Metro newspaper reports, Starbucks has nearly 700 location in the UK, but has "paid no corporation tax in three years, despite annual takings of almost £400million."
According to UK Uncut, one of the groups which targeted the coffee multinational say the move is a clear "admission of guilt" and is a direct result of the tax justice movement organized by citizens.
"It is not up to Starbucks to promise it will pay a bit more tax when it suits them, it’s up to the government to force companies to pay their fair share."
—Jane Harvey, UK Uncut
"Starbucks' announcement is a blatant admission of guilt that they have intentionally avoided tax in the UK for years," said Jane Harvey, as spokesperson for UK Uncut. "It is not up to Starbucks to promise it will pay a bit more tax when it suits them, it’s up to the government to force companies to pay their fair share. This announcement shows that protest and public pressure works and that we are doing the government’s job for them as they refuse to tackle tax avoidance."
British MP George Osborne, who serves as the Chancellor of the Exchequer, said Monday he could “completely understand people’s anger” when they see huge multinational corporations avoiding taxes as the nation's poor and working classes struggle in a down economy. Osborne has vowed to provide new government money to help improve tax collection plans with the Daily Telegraph's Christopher Hope saying that even the tepid government action "could be seen as a vindication for the aggressive protests run by campaign groups like Uncut."
As the Christian Science Monitor reports:
Parliament's public accounts committee said the government should "get a grip" and clamp down on multinationals that exploit tax laws to move profits generated in Britain to offshore domains.
"Global companies with huge operations in the U.K., generating significant amounts of income, are getting away with paying little or no corporation tax here," said Labour legislator Margaret Hodge, who chairs the all-party committee. "This is outrageous and an insult to British businesses and individuals who pay their fair share."
As the British economy splutters amid Europe's economic crisis, and the government slashes spending in a bid to curb the deficit, public anger has grown against companies that pay little tax while making large profits.
Companies operating in Europe can base themselves in any of the 27 European Union nations, allowing them to take advantage of a particular country's low tax rates.
Google has picked Ireland and Bermuda as its main bases, while coffee chain Starbucks has its European base in The Netherlands and pays British tax only after transferring large sums in royalties to its Dutch headquarters.
The committee said online retailer Amazon paid 1.8 million pounds ($2.9 million) in British tax in 2011, on turnover of 207 million pounds.
Despite Starbuck's shift, UK Uncut is not calling off planned protests againt the company at week's end. The group is planning at least 28 actions to take place at Starbucks stores across the country, including Birmingham, Glasgow, Cardiff, Portsmouth, Truro and Shrewsbury.
Not letting up the pressure, Harvey said the British government’s next step must be to "close the loopholes that Starbucks and other companies use to avoid paying billions in tax to the UK, instead of targeting single mums and disabled people through slashing public services, the welfare state and privatizing the NHS."