Why Starbucks can't dump its tax bill on the public

No company, even one as big as Starbucks, can simply decide how much profit it makes.

On Wednesday I received the most brilliantly headlined press release I've seen since (yes, this actually happened) the one announcing that god had returned to Earth, and was seeking corporate sponsorship:

'Starbucks are Bastards for not paying Tax in this Country', says Tyrrells Crisps and Chase Vodka Founder

The text of the statement, from founder William Chase, is disappointingly bereft of further expletives, but he does use other strong language. "Our hard earned money". "Patronising". "Laughable". "Theft". And this, remember, isn’t an activist speaking, it’s an entrepreneur (albeit one whose businesses find it rather harder to decide their own tax rate). The rage against corporate tax avoidance clearly goes way beyond the usual suspects.

But it's not universal. Some argue, in fact, that any attempt to minimise such avoidance will blow up in our face. With apologies both for singling her out, and for reducing her argument to one Tweet, here's libertarian blogger Charlotte Gore on Twitter last Thursday:

Starbucks board will have to make the money elsewhere. It's going to be the staff or the customers that ultimately pay.

This is an argument you hear quite a lot – that any attempt to close loopholes in the tax system will actually hurt the general public. That the £20 million tax Starbucks UK has now magnanimously decided to pay means £20 million of extra charges dumped onto the rest of us.

The problem is, it's nonsense.

Actions do have consequences, of course, and any attempt to squeeze a company probably will result in its attempting to recoup that money elsewhere. Starbucks doesn't answer to the public, it answers to its owners: whatever we may think of this fact, shareholder value will always be management’s first priority.

But the libertarian argument is nonsense, nonetheless. It's implicitly based on two dubious assumptions: that multinationals like Starbucks are like vengeful tribal gods, who can never be influenced, only placated; and that the state is utterly powerless before them.

Starbucks' board will try to recoup any extra taxes it pays elsewhere. But the key word there is try. They can jack up their prices, dumping the charge onto customers – but that, all the laws of economics says, would mean fewer sales, and so less profit.

They can lean on the wage bill, eating into paid lunch breaks and sick leave – are trying, in fact, to do just that. But we don't know how it'll play out. Bosses don’t give staff good working conditions out of the goodness of their hearts, but because it’s better for their bottom line. Worse staff performance, or the bad publicity generated by this latest crackdown, might end up costing the company more than it saves.

Then again, it might not. But the point remains: even the most powerful multinational doesn't operate in a vacuum. Managers may wish to dump its corporation tax bill onto its customers or staff. But they might have no choice but to pass it back to its shareholders.

No company, even one as big as Starbucks, can simply decide how much profit it makes – any more than it should decide how much tax it pays.

UK Uncut supporters protest outside a Starbucks coffee shop near Regent Street. Photograph: Getty Images.

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.

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Chi Onwurah MP: I did not want to vote for Trident - but I did

I do believe the use of nuclear weapons is immoral, but there is more to consider than that.

I did not want to vote for the renewal of Trident. I don’t like voting with the Tories, I don’t want to legitimise a dialogue of death and I’d much, much prefer to vote for investment in schools and education than weapons of mass destruction. 

The fact that I’d recently returned from a commemorating the Centenary of the Somme with veterans of the Tyneside Battalions  had highlighted, again, both the horror and the futility of war. 

As friends in Newcastle and colleagues in Parliament can testify, I spent the days leading up to the vote asking for views. I read constituents’ emails on the subject as well as the (many) briefings. I studied the motion  in detail and listened carefully to the arguments of colleagues who were voting against Trident. 

I did not want to vote for Trident. But I did. Why?

The first duty of Government is to protect its citizens. That is a duty I take very seriously. Like all of my colleagues on the Labour benches, I am committed to the twin goals of a safe and secure United Kingdom and a world free of nuclear weapons. In both 2010 and in 2015 I was elected on manifestos that pledged we would retain the minimum necessary nuclear deterrent, whilst at the same time working towards reducing and eradicating nuclear weapons. Last year, Party members reaffirmed that policy at conference. However the Leader of my party and some of my frontbench colleagues voted against that position. 

For me there were four key questions – cost, effectiveness, morality and making the world safer.

1. Cost

Whilst there is not enough transparency on cost, the SNP and Green Party estimates of  up to £200bn double count all kinds of in-service costs, most of which would also be applicable to  any conventional replacement.  The estimate of between £30 to 40bn over 35 years seemed to me most credible. And this does not include the benefits of the 30,000 jobs that depend on building submarines - either directly or in the supply chain - or the value to the engineering and manufacturing sector that they represent. That is why my union, Unite, backed renewal. That is why EEF, the manufacturing association, backed renewal. If Trident were not renewed, the money saved would not go on the NHS, no more than our EU membership fee will.  We are a very unequal nation, but we are also a rich one - we should be able to maintain our defence capability and invest in a welfare system and the NHS.  

2. Effectiveness 

I read many reports citing cyber insecurity and potential drone attacks, but the evidence convinced me that, whilst these threats are real, they are not (yet) such as to significantly undermine effectiveness overall. Like Lisa Nandy, I was concerned about the apparently openended nature of the commitment to nuclear weapons but the motion did also emphasise disarmament. Jeremy Corbyn’s argument that nuclear weapons were ineffective because they did not deter the Rwandan genocide,  I found more difficult to follow. 

3. Morality 

This was for me perhaps the strongest argument agains renewal. It is one rarely articulated. Many hide behind cost and effectiveness when they believe nuclear weapons are immoral. 

I am not a conscientious objector  but I have a great deal of respect for those who are, and I do believe the use of nuclear weapons is immoral. 

But if you accept the concept of armed defence and believe in taking armed action to protect UK or global citizens, then the unilateral disarmament argument seems to resolve into 1) hiding behind the American deterrent 2) that it will make the world safer, or 3) that it doesn’t matter whether we end up in thermonuclear destruction as long as our hands are clean. The first and the third I do not accept.

4. A safer world

This was the question I ended up wrestling with.  Caroline Lucas’ argument that having nuclear weapons encourages other countries to use them would have been an excellent one to make back in 1948. The question now is not whether or not we have them -  we do -  but whether or not we get rid of them, unilaterally.

A world free of nuclear weapons needs countries like the UK to take a lead. It needs stability, balance, and a predictable pace of weapons reductions. It takes years of negotiations. I am proud of my party’s record on nuclear disarmament. The previous Labour Government was the first nuclear-armed power in the world to commit to the goal of a world free from nuclear weapons. We made the decision to decommission all land and air launched missiles. We did it unilaterally, setting an example. But nobody followed.

Working with other countries in recent decades, we have halved our own nuclear stockpiles and the US and Russia have reduced their warheads from 60,000 to 16,000 and that is expected to halve again by 2022. The evidence is clear that multilateralism works, although this Government has yet to demonstrate its commitment. 

So would Britain declaring that it was not going to renew Trident make the world, and the UK, safer? Would it tend to stabilise or destabilise? I spent hours debating that. I considered Britain on the road to Brexit with a new Prime Minister with no plan and an absent Labour leader, Europe between fear of migration and disintegration, Russia at bay, the Turkey coup, Israeli-Iranian relations, the Republican party’s candidate for President and the reality that terrorist massacres are a regular feature all over the world. I thought about my constituents, would declaring that Labour was against Trident make them feel safer and more secure?

My conclusion was that it would not make the world more stable and it would not make my constituents feel more secure.

And so I voted.