Starbucks and The Politics of Coffee

How much tax shall we pay this year?
Nothing winds people up quite so much as a good tax story. The news that Starbucks pays no UK tax to speak of got all sorts of people jumping up and down and getting over-excited. I’m amazed anyone is surprised. SMEs invariably pay tax as they can’t take advantage of overseas jurisdictions. If they could, some would and some wouldn’t*. Listed companies have a duty to their shareholders to maximise their profits – they’re not social enterprises and don’t pretend to be. Tax legislation can never keep up with the lawyers, and companies will always tip toe along the outer limits of tax “avoidance”. So if you can’t legislate to close tax loopholes what can you do? It’s pretty obvious; Starbucks’ shareholders are going to be pretty sensitive to a 10% fall in sales if people boycott them. If it’s in a company’s best interests to pay tax then it will do.

This is what the conservation/green movement has to do – to engage with business and not castigate it. There are always going to be folk who want to do the right thing, and of course the more of these guys the better. The real gains will come, though, if corporates and landowners can be persuaded that there’s a positive economic output to “going green”. They don’t generally react well to legislation or the kind of vilification I remember from the polarized politics of the 70s and need carrot not stick. M&S’s Plan A and the Co-op’s Plan Bee (which fall into the “wanting to do the right thing” category) have been a great successes in terms of what they have brought to their brands, and as corporates increasingly think of US as being more than just consumers these kind of projects will be more and more important.

*Which reminds me of the time I consulted a tax lawyer in my previous life in the City. I wanted to ask him about a profit our little business had banked. “OK, so how much tax will we pay?” I naively asked. “How much tax do you want to pay?” came the answer.