By paying extra tax Starbucks is doing exactly the wrong thing

A "moral taxation" system would be deeply weird.

So Starbucks has caved to public pressure and opted to pay more tax. It doesn't have to - it has paid its legal dues - but is chosing to, as a moral gesture, in order to appease public anger. It is also trying to appease MPs, who have been keen to tap into this public anger by declaring tax avoidance "morally repugnant".

Good thought, but any "moral repugnance" is in the tax laws they themselves continue to approve. No actual changes in legislation have been planned. Instead the government has opted to pressure companies not staying within the "spirit of the law" in a £77m crackdown.

This is odd. When government spots something "immoral" going on that is not yet illegal, common practice is to change the law (rather than simply moralise). It's also common practice for companies make money by working out how they can cut costs while staying within the letter of the law.

If these practices are abandoned, a deeply strange system starts to emerge. Namely, a tax system which relies on public pressure to a few high profile firms. This looks unappetisingly vague and inconsistent to outsiders. As Alex Henderson from PWC told City AM:

"It is important that we have stability and simplicity in the tax regime if the UK is to attract foreign firms - if there is uncertainty in the system that is concerning."

Admittedly, there are a few places where simply urging people to keep to the "spirit of the law" works - places like China, where laws are occasionally kept vague (but with huge penalties) to scare people into behaving extra well. It may not work so well here.

Starbucks. Photograph: Getty Images

Martha Gill writes the weekly Irrational Animals column. You can follow her on Twitter here: @Martha_Gill.

Getty
Show Hide image

Italian PM Matteo Renzi resigns after referendum No vote

Europe's right-wing populists cheered the result. 

Italy's centrist Prime Minister Matteo Renzi was forced to resign late on Sunday after he lost a referendum on constitutional change.

With most ballots counted, 60 per cent of Italians voted No to change, according to the BBC. The turn out was nearly 70 per cent. 

Voters were asked whether they backed a reform to Italy's complex political system, but right-wing populists have interpreted the referendum as a wider poll on the direction of the country.

Before the result, former Ukip leader Nigel Farage tweeted: "Hope the exit polls in Italy are right. This vote looks to me to be more about the Euro than constitutional change."

The leader of France's far-right Front National, Marine Le Pen, tweeted "bravo" to her Eurosceptic "friend" Matteo Salvini, a politician who campaigned for the No vote. She described the referendum result as a "thirst for liberty". 

In his resignation speech, Renzi told reporters he took responsibility for the outcome and added "good luck to us all". 

Since gaining office in 2014, Renzi has been a reformist politician. He introduced same-sex civil unions, made employment laws more flexible and abolished small taxes, and was known by some as "Europe's last Blairite".

However, his proposed constitutional reforms divided opinion even among liberals, because of the way they removed certain checks and balances and handed increased power to the government.

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.