Starbucks’ UK Tax Avoidance

Starbucks’ UK Tax Avoidance

As Chancellor of the Exchequer George Osborne announces new tax measures and slashes welfare bills, Starbucks are recording multimillion pound profits.

Inside Starbucks Coffee at the Trafford Centre, Manchester.

The autumn statement delivered more dismal news for Britain’s economy on December 5th, however it has recently been made public that the US coffee giant is flourishing by avoiding paying UK corporation tax.

In April 2012, Starbucks UK Vice President of Marketing Ian Cranna revealed that they had 607 stores across Britain and Ireland, that is 693 less than its competitor Costa Coffee. However, in 2011 Costa Coffee recorded sales of £377m and paid £15m in tax, but Starbucks paid no corporation tax on revenues of £398m.

This graph shows the difference in revenue and tax paid between Starbucks and Costa Coffee (Source: Brand Republic)

In total, since the doors first opened to a British Starbucks coffee shop in 1998 the company has only paid £8.6m in tax. Whilst many people across the nation are feeling the wrath of George Osborne’s purse strings tightening, surely seeing the global coffee giant prosper by tax avoidance would leave a sour taste; this does not seem to be the case.

If you walk by any branch of Starbucks you will still see a long queue, you will still hear the chatter of satisfied customers and you will notice that the mug is very much half full rather than half empty for the US coffeehouse chain.

A barista who is employed by Starbucks at their Trafford Centre, Manchester branch, but wished to remain unnamed said: “I have worked here for a year and a half now and I have not noticed a change in popularity over the last few weeks.

“The story about Starbucks not paying tax broke coincided with the launch of our festive range of drinks, which are always very popular with our customers, so it did not seem to have an affect on how busy we are.”

Despite their brand image seeming to have escaped unscathed Starbucks hierarchy have released a statement to acknowledge that they need to do more. The company has agreed to review its accounting and finance system and pay more tax in Britain. 

It has employed the services of RLM Finsbury for tax guidance, a Starbucks spokesperson told PR Week: "RLM Finsbury has been engaged to advise Starbucks on specific issues in relation to tax and associated reputation matters."

The coffeehouse chain has since agreed to pay £20m in tax over the next two years, however whilst the company have been managing this crisis their close rivals Costa Coffee have seen sales rise by 7% as a direct affect of Starbucks' tax scandal.

The voxpop below was taken in Preston, asking members of the public whether Starbucks' recent tax scandal would affect their custom.

The Withdrawal of Troops from Afghanistan.

The Withdrawal of Troops from Afghanistan.

As the target for a major withdrawal of troops from Afghanistan set by Defence Secretary Philip Hammond approaches, some question whether the war has all been in vain.

The withdrawal will begin with 500 Royal Marines leaving their posts in Afghanistan at the turn of the year.  Although this figure is a mere drop in the ocean when it is considered that there are over 9000 service personnel deployed in Afghanistan, it is something of a starting point. Other plans have been announced to pull more troops out gradually between the summers of 2013 and 2014.

When asked about these plans to withdraw troops, Hammond told the BBC: "I would expect it will be significant, which means thousands, not hundreds, but I would not expect it to be the majority."

It is estimated that by 2014 the total cost of the war in Afghanistan could reach £20bn. However, the greatest loss has been the deaths of over 430 British troops since the war began in 2001.

This chart shows the number of British casualties in Afghanistan from 2002-2012 (Source: MoD)

The Royal Marines are currently mentoring the Afghan National Army (ANA) and the Afghan National Police (ANP). The aim is to train them to a level of combat so that they can handle the modern day warfare that takes place in their country on a daily basis without help from International Service Assistance Force (ISAF).

However, many are skeptical about the Afghans ability to stand up against a powerful insurgent army, the Taliban, despite the high caliber training that they are receiving. If the ANA cannot uphold the fight against the Taliban alone, then Britain’s mission has failed, Britain has wasted a substantial amount of finance and Britain has lost 438 heroes unnecessarily.

Private Simon Roberts, of the 4^th Battalion The Duke of Lancaster’s Regiment, has recently returned from training in Nicosia, Cyprus and is preparing for an upcoming tour of Afghanistan.

He said: “As a soldier I am trained to fight in combat, so I do not want to see troops being withdrawn from Helmand because that means there is less chance of me going there.

“We cannot withdraw too early and let the amount of casualties we have suffered die for no cause.”

Private Roberts, 21, trained in at Somme Barracks, Catterick before going to Germany and Cyprus for further training.

Private Roberts (left) in training.

Private Roberts in his Armed Forces uniform.

“Of course I am apprehensive, it would be unnatural not to be. But you imagine being put through the toughest training you can imagine, then not being able to put that training into practice in a real life situation.”

Private Roberts’ mother, Karin McGuinness, opposes her sons view. She said: “I know I am biased because my son is preparing for this war, but I think we should have withdrawn from Afghanistan a long time ago and let them fight their own battle.”

Ex-serviceman Edward Heaton, 31, served in Kabul, Afghanistan before the combat became aggressive as it is today.

He said: “The Taliban are an enemy who fight for religious purposes. When an enemy is religiously motivated, especially when these people dedicate themselves so strongly to their religion, it is difficult to see them backing down. So I believe we as an army have suppressed them far enough, maybe it is time to pull our guys out of Afghanistan and hand over to the ANA.”

The video below is a section of the interview with Edward Heaton discussing the withdrawal from Afghanistan.

Prime Minister David Cameron has publicly admitted that he is in favour of bringing our troops home from Afghanistan, however he was warned that it will be a gradually process and not and immediate withdrawal come 2013.