Coffee chain Starbucks has given in to pressure from United Kingdom lawmakers, campaigners and consumers and has agreed to pay more UK corporation tax, after a public outcry over how little it pays. Starbucks, along with other multinational companies like Google and Amazon, pays very little tax in Britain, despite making substantial sales there.
Managing director of Starbucks UK, Kris Engskov, announced that the company would pay "a significant amount of tax during 2013 and 2014, regardless of whether the company is profitable".The extra taxes could amount to 20 million pounds over the next two years. Starbucks has paid £8.6m in corporation tax in its 14 years of trading in the UK, and for the past three years Starbucks has paid no corporation tax in Britain despite telling investors that the local business was highly profitable, while reporting an actual loss. The company had UK sales of nearly £400m in 2011 but has reported a taxable profit only once in its 15 years of operating in the UK.
So even though Starbucks have done nothing illegal - they have behaved immorally; morals are always subjective, but clearly a lot of their former customers are unhappy with their behaviour and have boycotted their stores. In Chapter six, we all studied Corporate Social Responsibility, and even though they claim to be socially responsible, they haven't done their duty of paying taxes like a good global citizen. Much harm is done in the world by people/organizations behaving legally but immorally.
Trouble brewing over Starbucks' UK taxes
Starbucks has joined the growing roll call of big high street names reportedly paying virtually no tax in the UK
4 comments:
Hmmmm...question is who is to blame here? The corporations (who just follow the legal parameters of the countries within they do business) or politicians/societies who set up systems as such.
Corporate tax rates and the pros and cons of lower vs. higher rates are ALWAYS in the media and a hot debate topic amongst many...Now that you are aware of such an example, keep an eye out for such debates in the media (always popular during election times).
Good post!
The company shows that they are willing to commit by agreeing to pay the taxes even though they have lost money. Though they have bailed on some taxes recovering their reputation would not be difficult. They do other helpful actions such as free trade which is known worldwide. Starbucks will always be respected unless they make a huge mistake, I do not think that this will impact them in long term and this looks like a short term issue.
I always loved Starbucks, but knowing this is just a bonus! Like Adiel said, the company is willing to commit to their business and pay these taxes even if they don't do well. This takes a real honest and good company to do so. I really respect them so much, not just for their drinks but just the concepts they promote.
I believe that despite this, Starbucks will only grow from here. There product attracts a lot of customers that maybe comparable to Tim Hortons. Maybe one day Starbucks will have better income that Timmy's and be the top coffee house chain.
Post a Comment