http://www.bbc.co.uk/news/magazine-20560359
I dont know the full ins and outs, but on the face of it, they should pay, starbucks reckon that if the do, the will cut benefits to their own employees (sick pay etc)
It's a joke to be honest.
If you're a Starbucks Franchisee you pay your business rates, PAYE, NI and income tax as well as utilities etc. You've paid a fortune for your licence and then you're being boycotted for something you can't control and can do nothing about. Yes, I know the other side to it and instead of laying out the arguments you can read them HERE (http://franchises.about.com/od/mostpopularfranchises/a/starbucks-franchise.htm)but it's a dodgy call.
Google is harder to pin down given its nature and I have less of an issue with them and Amazon I'm in two minds about.
I really think part of the problem is stores not applying the same rules as those under DSR. It make far more sense to buy anything covered by DSR than by going to the shop. You can open the goods to inspect or try and you have seven days to return. Most shed retailers will refuse to accept something back which has been opened..... it's a no brainer.
I bought something from PC World (Yes, I know but it was price matched). I opened it and didn't like it so I tried to return it. They refused citing it had been opened. That really hacked me off. So I bought another one online from them DSR'ed the opened one and returned the unopened one to the store. HAH that showed them and I'm sure it cost them ..... why not just make the experience more pleasant for the customer in the first place!?
If nothing else Amazon has superb returns and customer service. Like it or not it works and it's competitive and good ol' dMw get a kickback from the money I spend. It's my first port of call for stuff which I can't buy from John Lewis.
I do feel that consumers need to know that companies dodge the tax as for some people that does play an important part in their buying decisions.
If something is the same price from a tangible, physical shop or even a little bit more expensive then I will buy it from there. Pen has a good point about different return policies but a high-ish end retailer normally be pretty good. John Lewis have always done right by me, they have very good customer returns and will price match so the best of all worlds there.
Personally I feel pretty peeved by the tax dodgers. It seems to be the super rich that get away with it (businesses and individuals) leaving those who earn less but honest bucks to pick up the slack. I know that these companies employ thousands and that puts food on the table for people but companies rarely will let their profits go south as they will blood let to ensure share holders are happy.
We are not in America and capitalism is beginning to go a bit wild with the middle class disappearing.
Name them and shame them and let the consumer decide.
DZ
I pay tax why should a big company(or anyone) who make loads of £££'s in profit not have too?
If the loop-holes are there for companies to exploit then they will, if somebody gave you a legal way that you could avoid paying most the tax you should, wouldn't you think about it?
The point is this has been going on for years even back to the 70's but public opinion has never seemed so strong on this. Maybe it's a classic govt diversion? Not saying hitler did it but....
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It's real easy to make a one line reply here, but it's damn difficult to actually define a resolution. The problem relates to transfer pricing (which is the charging of goods/services between different parts of the same organization, in particular when it is cross-border) and defining what is reasonable in such a way that it has a cat in hell's chance of standing up in a court of law.
Public opinion on this topic is driven by a complete lack of understanding of how the problem arises. It's not just UK tax law, it's International tax law that enables this movement of profits to more favourable jurisdictions. So, it's clearly easy to solve, you just get the whole world to agree on a new transfer pricing set of double-tax agreements, or you stop global trade.
There, a solution for the masses, if everyone is banned from buying coffee, amazon books and using search engines then the problem disappears......except that you'd also need to stop buying or using *ANYTHING* that comes from or involves work or services outside the UK.
That's the problem, it's a global one. Easy to headline, even easier to be misled by the press and damn-near almost impossible to legislate against under their own tax rules.
I have some sympathy with those named and shamed, they're doing what any prudent person would do with their own affairs.
Quote from: TeaLeaf;362811I have some sympathy with those named and shamed, they're doing what any prudent person would do with their own affairs.
I agree with what you say that its a global problem but the last statement I hope doesn't stand true for most people in the UK. People can still make a difference, hence the recent commitment from starbucks for pay 10 million per year for the next 2 years.
I have spent more than half of this year in a country outside of the UK and I have become very proud of certain aspects of our country and heritage. While corporation tax doesn't go towards schooling and the NHS it effects spending on a whole and less money does lead to a lower standard of living for our children.
I hope that most people in this country who have a standard of living would want to help those who do not meet that standard by paying tax. Those very well off seem to not agree with this. Capitalism is getting a bit out of control IMO we are going to be a US state soon if we keep this up. Yes there are people that abuse the situation and they are worse than those avoiding tax as they are directly depriving those more worthy.
Lets hope things change.
DZ
So Starbucks decide to pay their tax at last (wish I had that option)
Now they've taken paid meal-break from the staff and stopped paying 1 days sick leave.
The Man usually wins. :(
So one insignificant company pays a minor amount of tax. Does that make all the other multinationals innocent?
I feel sorry for the well known names being pulled through the trial by media when the vast bulk of the revenue lost in transfer pricing is with companies not mentioned.
Are you self-employed DZ? How many people on this forum are running their own companies? Do they organise their affairs to minimise tax? A Board has a fiscal duty to do this, as individuals we chose to minimise our tax. I suspect very few are guilt-free here and I strongly dislike the pious way some media or others are taking the so-called moral high ground when they are themselves as guilty of avoidance.
That's the other problem. It's avoidance not evasion yet we're all hysterically wailing as if they broke the law.
If companies legitimately limit their tax liabilities just like the law allows then complain to the politicians not the companies as the law need changing.
If companies are actually moving deliberately incorrect profits out of UK jurisdiction then they are committing a criminal offence, evading tax and HMRC will prosecute them.
As nobody has been tried in anything other than the media, then I would suggest that the public stoning of the three companies unlucky enough to have been asked to speak to the Select Committee is not our finest hour.
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The gutter press strike again....
HRMC should be copping the flack for not making any attempts at closing these 'loopholes' in the first place.
Just found this one. Might help explain transfer pricing a bit better than I did.
http://www.bbc.co.uk/news/business-20580545
HMRC having had massive staff cuts under both the current and previous administrations can only follow tax law. Unfortunately tax laws can only be amended by politicians some of which are probably share holders in the companies that legally avoid tax so public opinion and momentum are needed nice debate so far
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Quote from: TeaLeaf;362819Are you self-employed DZ? How many people on this forum are running their own companies? Do they organise their affairs to minimise tax? A Board has a fiscal duty to do this, as individuals we chose to minimise our tax. I suspect very few are guilt-free here and I strongly dislike the pious way some media or others are taking the so-called moral high ground when they are themselves as guilty of avoidance.
That's the other problem. It's avoidance not evasion yet we're all hysterically wailing as if they broke the law.
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I am not self employed, have been for a bit in the past but I still payed my way.
You are very right that they have not broken the law but people everyday do thing which are not illegal but are still questionable in terms of morals. The loopholes need to be closed.
Its only recently that I feel the way I do. Travelling to countries without social healthcare, schooling and welfare has really changed my opinion on this. We are lucky to be born in a country where if you are down on your luck you can still live in relative comfort with a basic fundamentals compared to other countries where you are on your own. Those services are not free and everyone needs to pay their way as everyone at some stage in life will use these services in one form or another.
Do some of us pay too much tax... the answer is probably yes... Why? Because other normally more fortunate who can afford to give more decide to give nothing.
That is wrong IMO.
I can't imagine anyone volunteering to pay more tax than they have to. I don't like the thought of companies using seedy tricks to avoid taxes, those tricks should be investigated and where possible closed. But the trial by media is not an acceptable means of investigation.
I believe corporation tax is far too low here, however since a company like Google can pick its European tax base, hiking it up high won't do us any good, they can just pay taxes elsewhere instead legally. The problem is a European one that has to be handled by the group as a whole. Unfortunately there are too many cooks involved in the whole situation and what is a problem for many member states is a lucrative income for others. It's not a quick or easy fix.
A company exists to make profits, Apple force workers to the point of suicide, Nike used child labourers, Oil companies pollute nature reserves and pay the fines when it's cheaper than solving a problem cleanly. It's the way capitalism works. At the end of the day the way the books balance is all that matters. If we lived in a system where fair working hours and benefits were rewarded by tax cuts I'm sure businesses would start offering that level of support. The issue of tax can't just be looked at in isolation, society as a whole worships money above all else. Something will give eventually, but the laws should be guiding us to a better place not just making the most possible cash.
Quote from: T-Bag;362853 The issue of tax can't just be looked at in isolation, society as a whole worships money above all else. Something will give eventually, but the laws should be guiding us to a better place not just making the most possible cash.[/QUOTECompletely agree with this sentiment.
From an economics point of view, the general theory is that a lowering of corporation tax actually increases tax revenues and allows the Government of the day to pay for more things.
If you tax more, the wealthy coporations leave (because they can) and you have lower tax revenues. Look at what Ireland did as an example. Look at why coffee is whoesaled from Switzerland.......12.5% corporation tax, roughly half our rates.
Quote from: TeaLeaf;362867From an economics point of view, the general theory is that a lowering of corporation tax actually increases tax revenues and allows the Government of the day to pay for more things.
If you tax more, the wealthy coporations leave (because they can) and you have lower tax revenues. Look at what Ireland did as an example. Look at why coffee is whoesaled from Switzerland.......12.5% corporation tax, roughly half our rates.
From a practical point of view, looking at the figure in the US at least, the highest levels of job creation, and the most balanced budgets have occurred under high levels of corporation tax. That won't work within the EU the way it currently is though because companies will just go to the lowest tax country so higher taxes means less companies.
Though if it were possible for all the countries to agree to raise corporation tax to the same level, or just have a central tax body for the EU distributed to countries according the financial activity of the business, then I imagine there would be a lot of benefits. Companies wouldn't pull out of the EU sector just because of some tax. They might threaten to and moan, but ultimately its still profitable so they'll still get involved. Then in order to avoid as much tax as possible they'll invest in additional staff and R&D, things that grow the company, and hence the shareprice and can be written off against tax. That sounds like a dodge, but having higher employment and more innovation in a region is exactly what is needed. Giving the government money doesn't really solve anything, having more people employed, spending money growing the economy does.
I'm not an economist, I've no idea if what I'm saying in practice would work in Europe, or if there are loopholes that multinational companies would use to avoid it, and you'd just end up stifling local business. What I don't think we should do, is lower corporation rates to try and get more tax. It's a race to the bottom in which everyone ultimately loses.
From a practical point of view, look at the Ireland or Switzerland mentioned, they seem to show lower tax means higher revenue, Ireland's revenues soared as their historically high corporation tax rates were lowered (and more and more of the Ireland's black economy went legit as rates fell too) and Switzerland is not exactly short of a penny or three. Then again, we're both right, depending on where on the Laffer curve you sit, we're obviously looking at it from different ends!
The main problem with Laffer (or whatever the current model is called) is that it only looks at one economy and predicts tax revenues for that single economy based on the rate of corporate taxation. Something like 60% or so was the sweet spot according to Laffer, but you don't find many countries with a 65% tax rate - and there's a reason for this.
So even if Laffer holds true from your perspective, once you take into account the mobility of multinational business you might find that revenues fall as they will make a choice to base themselves in a lower cost jurisdiction. They might not pull out of the EU, but they'd move to a cheaper part of the EU as often mentioned by IoD. Why is Amazon based there? Why did WPP move out of the UK? Etc.
As neither of us are in charge of the corporation tax rate this might have to remain an interesting intellectual diversion!
Actually, one of our firm's specialties is transfer pricing. Nowadays, tax authorities tend to look where the economic value was created, and not simply where you legally (artificially) locate the IP, for example.
Quote from: TeaLeaf;362892From a practical point of view, look at the Ireland or Switzerland mentioned, they seem to show lower tax means higher revenue, Ireland's revenues soared as their historically high corporation tax rates were lowered (and more and more of the Ireland's black economy went legit as rates fell too) and Switzerland is not exactly short of a penny or three.
That's that part that complicates things in Europe. A Company can just pack up and head to another country. Which means any decision needs to be across the whole EU, and the chances of that happening I'd say are slim to none.
If we dropped our rates to Ireland levels, there's nothing stopping them dropping their's too, the cycle would continue and you could quite easily end up with plenty of companies but negligible tax income.
True, companies shift their profits around to keep the tax man away, but since Google and others live from selling services, it's not completely fair to just look at turnover vs paid corporate tax. Remember, there's already been paud VAT on those goods and services. If there hasn't, that's entirely the fault of the host country.
Here in Norway this debate doesn't exist. Why? Because our socialist ways have ensured our government already has more money than it can spend without ****ing up the economy (inflation etc.). This has been done through decades of careful management and responsible planning. Then look at the countries where thus debate occurs. France, Greece and to a certain extent the UK. Countries where irresponsible politicians were allowed to hand over all solid government-owned companies to private investors, and then letting private companies gorge themselves on public money providing services the government should have provided.
Still, politicians never learn. Listening to our conservatives now is scary. They want to do the same things Thatcher did to completely screw the UK economy for years.
When it comes to private companies we didn't hand them the farm years ago, so now we don't have to beg for scraps.
Oh, and keeping the oil in government hands helped as well :)
Quote from: Blunt;362815So Starbucks decide to pay their tax at last (wish I had that option)
Now they've taken paid meal-break from the staff and stopped paying 1 days sick leave.
The Man usually wins. :(
Not much different from every where now Blunt Even in the care sector where I have worked you cannot get paid for being of sick for a day (having worked in the NHS & Local Council).