Belfast Telegraph

Saturday 25 October 2014

Rich firms’ cup overflowing but poor people must pay up

Wrong priorities: Starbucks paid no tax on its UK business this year while Nelson McCausland (below) relentlessly targets benefit fraud

You won’t find Charlie Johnston sipping a latte in Starbucks on Saturday as the ICTU’s march against austerity passes along Royal Avenue. The 20-year-old was jailed for a month at Belfast Magistrates Court last week for defrauding the taxpayer.

Social Development Minister Nelson McCausland will be chuffed that another scrounger has a prison sentence on his record to follow him down the years. After all, there might be no need for protest against spending cuts if the Treasury coffers hadn’t been drained by fraudsters robbing the Revenue.

The court heard that Charlie (not his real name) had pocketed £218 in Jobseekers Allowance that he wasn’t entitled to. That’ll teach him — a day behind bars for every seven quid filched from the public purse.

Jimmy Stewart (not his real name either) might observe with some bitterness that Charlie could count himself lucky. Jimmy was handed a two-month sentence for scamming £188 in Income Support — a day inside for every three pounds.

Meanwhile, Reuters reports that Starbucks, with 735 outlets in the UK, has since 1998 paid just £8.6m in taxes on sales of £3bn — less than a quarter of one percent. In the last three years, Starbucks has managed to reduce this burden to nil, by, among other devices, loading its UK operation with “debts” to Starbucks operations in jurisdictions with much lower tax thresholds. Starbucks UK, for example, pays overseas outlets a fee for every use of the Starbucks logo.

No local coffee shop, or even chain of coffee shops, can adopt any comparable accounting strategy. They haven’t a chance.

In 2008, Starbucks reported a loss of £26m on its UK business. In the same year, chief executive Howard Schultz told investors that the company was making so much money in the UK that it was planning to apply the lessons to its US business. Both statements were true.

The shortfall from Starbucks zero contribution is being made up through measures which include reductions in public spending by slashing jobs, freezing public sector pay, cutting health and education budgets, reducing benefits and putting the likes of Charlie and Jimmy behind bars so as to deter other desperadoes from mugging the State.

It should be said that Starbucks is doing nothing illegal. It might be added that’s the real scandal.

Starbucks isn’t alone. Other major companies which have flitted across the headlines in the past couple of years for equally imaginative, entirely legal tax-avoidance schemes include Vodaphone, Boots, Top Shop, Facebook, Google, etc. Last year, Facebook paid £238,000 in tax on £175m revenue. Google chipped in £6m on £2.6bn. Work out the percentages yourself and have a microscope ready to read the results.

Not unexpectedly, super-rich individuals are just as adept at minimising their contributions to society.

In 2006, (interestingly enough, the last year for which relevant figures are available) there were 54 billionaires in the UK who paid an aggregate £14.7m in income tax. Of this, James Dyson (vacuum cleaners, bladeless fans etc.) paid £9m — 61% of the total. Tax professionals reckon that Dyson and Harry Potter author JK Rowling are the only two British-resident billionaires paying tax at a rate even remotely related to income.

So the Government and the tax collectors are striving to put these grotesque anomalies to rights?

Don’t be silly.

In the last three years, HM Revenue and Customs has spent £17.5m publicising the need to stamp out benefit fraud.

Over the same period, £633,000 has been splurged out on exposing high-end tax evasion. A measure of official priorities.

And listen to this from minister Nelson McCausland’s Department four months ago: “It is in everyone’s interest to report benefit fraud. In some cases, those who commit benefit fraud can receive other benefits, such as dental treatment and free school meals for their children… People who commit benefit fraud are stealing money from some of the most poor and vulnerable people in our society.”

Here’s a couple more examples of the heartless criminals nabbed this month by Nelson’s sleuths.

A 27-year-old Belfast man — 100 hours community service and costs for fleecing the Revenue of £134. A woman from Co Antrim, (25) — a month suspended for pillaging £204. Belfast man, (28), — 80 hours community service for swindling £110.

All named and shamed on Nelson’s departmental website.

One of the proposals in the Welfare Reform Bill targeted by Saturday’s union march is for harsher measures against benefit miscreants.

Would it not be reasonable in all the circumstances for MLAs to delay this item until such times as Starbucks is shown to be paying its fair share?

Do I sense a Petition of Concern coming on?

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