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Sunday, January 27, 2013

Storm in a teacup

Today's Telegraph reports the astonishing news that Starbucks has threatened to suspend millions of pounds of investment in Britain after what it described as constant and unfair attacks over its tax affairs by David Cameron and the Government.

The paper says that Kris Engskov, the multinational’s UK managing director, has demanded talks at Downing Street after the Prime Minister said tax-avoiding companies had to “wake up and smell the coffee”. He has interpreted this as a direct attack on Starbucks which has been criticised for not paying corporation tax in Britain.

The paper reports that Mr Engskov is concerned about the “politicisation” of the tax issue.They add that Starbucks argues that it makes no profits in the UK and so is not required to pay the tax. In fact since the arrival of Starbucks in Britain in 1998, it has paid £8.5 million in corporation tax, despite total sales of £3 billion. It said last month it had made a profit in only one year.

How tax is not a political issue is difficult to understand. Whether the company goes ahead with its £100m investment in the UK has yet to be seen but that sort of threat should not stop the government from insisting that multi-national companies pay what is due. We cannot have one rule for them and another for ordinary British taxpayers.

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