There are only two certainties in life, as anyone will tell you: death and taxes. Unless you’re Starbucks, that is. It hasn’t paid a bean in corporation tax for the past three years, according to an investigation into the coffee giant’s UK tax affairs by Reuters. That’s despite Starbucks’ reported UK sales of £398m last year. In fact, since it popped up in Britain back in 1998, it’s racked up sales to the tune of £3bn. And Reuters says it’s paid just £8.6m in corporation tax since then.
Relax, says Starbucks UK managing director Kris Engskov, without even a hint of a blush. “I want to personally assure you that Starbucks pays and will continue to pay our share of taxes in the UK to the letter of the law,” he blogged yesterday after Reuters released its findings. “We pride ourselves on doing business to the highest ethical standards, from the way we source our coffee to the way we pay our taxes. We are here for the long term.”
Ethical, eh? Starbucks indeed pays millions - as Engskov proudly proclaimed in yesterday’s blog - to British businesses including “cake-makers and shopfitters”, employs some 8,500 Brits and uses 86% ethically sourced coffee (see the Starbucks 2011 CSR report for more evidence of just how ethical they are if you’re still not reassured). Not too many coffee drinkers seem convinced. “Stand down everybody,” read one comment among a flurry at the end of Engskov’s blog voicing plans to boycott the chain. “They buy cakes locally!”
The dissent has spread to social media - so far five campaigns have been set up calling for a boycott on Facebook. Twitter is awash with angry calls for a public enquiry. And now Margaret Hodge - chairman of the Public Accounts Committee - is all of a froth too. She’s calling for HMRC to look into Starbucks’ tax affairs in a public enquiry, which could see Engskov and chums being grilled by MPs.
Starbucks may have dodged the second certainty in life for the past 14 years through deft (sneaky says Twitter; entirely legal and ethical says Starbucks) financial manoeuvring but, if public hostility towards the chain continues, Engskov may have to rethink his plans to open another 300 coffee shops over the next five years.
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