Is tax just a question of ethics?

In the wake of Starbucks’ tax U-turn, we need to acknowledge that multinationals already choose whether to pay tax or not - and make them pay their fair share.

So Starbucks is paying up.

Whether or not they will ever pay back all the tax they’ve allegedly avoided is still unclear. But the company’s announcement yesterday that they will “pay or pre-pay” around £20m to the Exchequer in the next two years is hugely significant for all sorts of other reasons. It proves the power of consumer democracy, showing that damage to a brand can reverse a company’s behaviour in a matter of weeks. It moves tax from the backroom of a tax negotiation to the heart of a corporation’s public responsibility to the countries and communities where it does business. And it throws the gauntlet down to other multinationals which use exactly the same kind of intra-company payments to shrink their tax bills, not just in the UK but around the world.

But some are already raising concerns that Starbuck’s back-down heralds a worrying new age of voluntary tax: at best, companies claiming that paying tax is philanthropy rather than legal duty, at worst a sort of ‘tax by mob rule’. The New Statesman’s Martha Gill argues that we’re approaching “a tax system which relies on public pressure to a few high profile firms” rather than changing the rules themselves.

Of course we need to change the rules, and we can’t rely simply on companies behaving themselves. Nor should we be replacing clear, certain tax laws with judicial or media activism. But the unappetising truth is that we are already living in an age of voluntary corporate tax for large multinationals, and have been for some time. If this is true in the UK, where online businesses can effectively choose whether to book their profits from UK sales in the UK itself or in a tax haven, then this is even more the case across Africa, Asia and Latin America, where countries lack our armour of anti-avoidance legislation, and whose tax inspectors are far more overstretched than even cuts-threatened HMRC.

In this environment, it’s gone largely unremarked that a few multinationals are already taking a different tack in complying with the "letter of the law". Financial services firm Hargreaves Lansdown, for example, has no tax haven subsidiaries, despite operating within a sector no stranger to "offshore". Legal and General explicitly aims to be categorised within the "low risk" category of HMRC’s risk rating. This is not to endorse these companies’ business practices, or even their tax affairs, but to point out that companies already make active choices, all the time, about their tax structuring. Starbucks’ announcement may go further than the others, and beyond the existing rules. But ironically, their corporate spin on their "voluntary" tax payments is actually a refreshing shot of reality: it calls a spade a spade, acknowledging that the rules are currently so wide that companies can indeed choose whether to pay tax. That’s an ethical choice, whether we like it or not.

Changing the rules to stop corporate tax being just “a bit of a bonus”, to be paid as and when companies choose, will ultimately require international action. To take just one slightly technical example: stopping companies booking their "UK" profits through Irish or Luxembourgish subsidiaries may arguably require strengthening the tax-law definition of a "permanent establishment", to allow national tax authorities to tax profits actually generated in a given country by a low-tax affiliate company registered elsewhere, and prevent that company’s profits floating free like a pirate ship in international waters. A change that will need to be written into both domestic laws and dozens of international tax treaties. And far more far-reaching reform is needed than that.

Next year offers a raft of vital opportunities at the G8 and elsewhere to start changing the international rules in earnest. Like all international action, it will take some time. In the meantime, countries all around the world, including the poorest, are haemorrhaging revenues into tax havens faster than they receive aid. While we wait for the rules to be changed, other multinationals need to explain why they now can’t or shouldn’t start paying their fair share of taxes: companies like Grolsch and Peroni owner SABMiller, whose perfectly legal Starbucks-type transactions we estimate have deprived African and Asian countries of enough revenues to put a quarter of a million children in school. It’s right that consumers should put these questions to companies. And that governments too should use their purchasing power to stop buying from tax avoiders, as a quiet announcement tucked away at the back of yesterday’s Autumn Statement suggests the UK government is mulling. At stake is not just a guilt-free cup of coffee, but revenues that are needed – right now – in the UK and some of the world’s poorest places.

Starbucks. Photograph: Getty Images

Mike Lewis is a tax justice campaigner at ActionAid

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He went in to report on crystal meth – before long, Luke Williams was hooked

The journalist moved into a house of meth addicts to investigate the drug. Within a month, he was using, too.

“I got a story, a very good story,” writes the young Australian journalist Luke Williams in the first chapter of his new book, The Ice Age. “Only it wasn’t the one I was expecting.” For three months in 2014, he lived in a house of crystal meth addicts in a suburb of Melbourne, Australia, to investigate the drug. Within a month, he had forgotten why he was there. He had become addicted himself.

What follows is a dizzying retelling of his experiences, which veers between stories of Williams’s psychotic episodes and facts about his drug of choice. His descent into addiction happened in a nondescript house in Pakenham, a suburb to the south-east of Melbourne – “one of the most badly affected meth areas in Australia”.

Williams, now 36, grew up nearby and went to school there. He already knew two meth users in the area well enough to rent a room with them – an out-of-work labourer called Smithy and his live-in ex-girlfriend Beck. It was they who gave Williams his first shot of crystal meth, less than three weeks into his stay.

The crystal form of methamphetamine, also known as “ice”, is an addictive and powerful stimulant that causes euphoria. It heightens alertness, energy and arousal, with comedowns that can lead to aggression and violence.

It has gained cultural significance in recent years because of the US television drama Breaking Bad, in which an otherwise mild-mannered and law-abiding chemistry teacher “cooks” and sells crystal meth. Yet not much is known about the long-term effects of the drug, which in some countries – such as the Czech Republic – is a graver problem than heroin. In the UK, crystal meth activity is low and mainly linked to the gay chemsex party scene, where drugs are used to enhance group sex experiences.


Photo: Scribe

The drug is linked to severe psychosis, which Williams experienced first hand. Detailed in his book in a neat little list, like a morbid twist on a teenage diary, are Williams’s delusions, entitled: “My psychotic ideas”. Some are harrowing. His conviction that his parents are trying to poison him, for example, which results in him threatening to kill them “with my bare f***ing hands”. Others are amusing: he abandons his journalistic endeavour almost immediately in the belief that his calling is to become a famous rap star.

“I think that I could maybe do spoken word, but rapping? No, no,” he chuckles, when he speaks to me via Skype from Nepal, where he is researching another story. He says that he wanted to investigate crystal meth use partly because he was bored. He had left journalism to work at a law firm, and his life “lacked a bit of kick”.

Although he describes himself as “white, middle-class [and] educated”, he was fixated by the characters from his youth on the city’s outskirts. “I missed [them] in the middle-class world; it seemed so polite and clean . . . I looked forward to getting back there, living cheap, and when I saw the state some of my friends were in, I was very curious to know what was going on with them. Nobody was writing about the working class and the underclass.”

Williams quickly shifted from observer to addict. In alarming and frank detail, his book tells of marathon masturbation sessions (his record was 16 hours), physical altercations and a thick fog of paranoia. He would search his name online and become convinced that anything written by, or about, the name “Luke Williams” involved him.

He became so obsessed with the memory of an ex-boyfriend called Nathaniel that he believed that Smithy had turned his ex “into a transsexual, so that he and his mates could have their way with the new female Nathaniel”.

After three months, Williams was kicked out of the house by an aggressive Smithy, who thought the journalist was stealing his cannabis (he wasn’t). The nearby hospital gave him no help, so Williams ended up on the streets. After a lot of persuasion, he eventually returned to safety with his parents. He has been recovering ever since.

There is talk of a crystal meth “epidemic” in rural and suburban areas of Australia, which has among the highest usage of the drug in the world. The number of people using it there tripled from 2011 to 2016, and 7 per cent of Australians over the age of 14 have reported using amphetamines or methamphetamines (in the UK, it’s 1 per cent).

Although Luke Williams’s story is an insight into one of the world’s most dangerous substances, it’s also a lesson in doing your research. The first time Williams took crystal meth, it was injected by one of his housemates and he believed that it was no different from powdered meth – more commonly known as speed – which he had been using occasionally to give him the energy to write.

The group called everything “meth”, regardless of what they were taking. “Our lingo just didn’t differentiate,” Williams tells me. “People don’t really understand the difference. I got the opportunity to say in the public domain that [crystal meth] is different . . . It eats away at your inside.”

The Ice Age: A Journey Into Crystal-Meth Addiction by Luke Williams is published by Scribe.

Anoosh Chakelian is deputy web editor at the New Statesman.

This article first appeared in the 19 January 2017 issue of the New Statesman, The Trump era