Belfast Telegraph

Thursday 28 August 2014

Editor's Viewpoint: Starbucks finally given a shot of tax

Most people will agree with MPs' criticism of multinational firms operating in the UK who use sophisticated schemes to avoid paying taxes due on profits. Starbucks, for example, has almost one third of the UK's coffee shop market but has paid corporation tax here only once in the last 15 years.

Margaret Hodge, chair of the of the Public Account Committee said the level of tax paid by such companies was outrageous and an insult to British businesses and individuals who pay their fair share.

Her comments will find a resonance with ordinary people who feel they are subjected to a myriad of taxes, direct and indirect, and would want companies they spend money with to face the same rigorous tax regime.

Of course tax experts will argue that every company will want to legally minimise its tax liability and give the greatest return possible to shareholders. But consumers justifiably feel they cannot gain the same tax breaks. Starbucks is expected to change the way it operates and pay more tax in the UK, although that may be as much in anticipation of a consumer backlash as a sudden crisis of conscience.

It seems only fair that multinational firms like Starbucks, Google and Amazon, should pay more in taxes on their UK profits and it should not be left up to them to decide when and how much that should be. Despite his protests that he is willing to tax everyone fairly, Chancellor George Osborne has also argued that a strict tax regime could drive big business away.

It is an argument - like the one that bankers need huge salaries to keep them in the UK - which the public does not buy any longer.

Now HM Revenue and Customs must aggressively target those firms indulging in corporation tax avoidance schemes.

HMRC has been given additional resources - although not enough to make up for earlier swingeing cuts in staffing levels - to carry out that task. Then we will see if the big businesses are serious about pulling out.

We suspect not, but if Starbucks left we will still not run short of coffee.

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