False Economy ran from 2010-2015. This site is no longer being updated, but the False Economy research team continue to report at Sentinel News.
Skip navigation


The golden mug, Osborne’s Autumn statement and tax dodgers who should pay

As Osborne's "more cuts are justified" Autumn statement looms and UK Uncut's inspired day of action plan against tax dodgers takes shape, campaigners around the country are looking ever closer at companies that continue to avoid to pay the tax that could fund public services. This post is from Birmingham Against The Cuts:

Starbucks golden mugStudents at the University of Birmingham, along with members of the public, young and old, decided to embarrass Ian Cranna – Starbucks VP for marketing – last week by awarding him a golden mug before his speech.

The mug was awarded for the company’s ‘mugging’ of the UK taxpayer. The VP Marketing was speaking at the University of Birmingham Business School as an engineering alumni – students wondered why someone from this particular company was invited to talk.

Many multinationals, including Google, Amazon and Starbucks, have been avoiding corporation tax.

Last month, Her Majesty’s Revenue & Customs (HMRC) were dragged in front of a Parliamentary Select Committee to be questioned about corporate tax deals. The BBC and the Guardian have revealed that HMRC has failed to prosecute any corporate services companies for their practices – which allow wealthy individuals and businesses to move money offshore.

As the government announces its budget this week, people are asking why they would possibly want to be cutting back on services that strengthen their ability to tax corporate entities, and to protect against tax fraud.

Starbucks has failed to pay any corporation tax to the HMRC for the last three years – and only £8.5m since the company arrived in 1998 despite racking up £3bn of sales in that time.

They achieve this through a number of payment schemes, which moves money to subsidiaries. One of the ways in which they do this is by having Starbucks UK pay fees for the use of the Starbucks name to a company based in a tax haven like Liechtenstein.

Surprisingly these fees tend to be around about the level of profit the UK company makes each year, sometimes even more.

In 2011/12, Starbucks generated a turnover of £398m, on which it apparently made a loss and therefore paid no tax. By comparison, Costa Coffee achieved a comparable turnover of £377m and paid £15m in tax.

The Starbucks franchise in the Muirhead Tower – where Political Science and International Studies is taught – is contracted by the University of Birmingham. The University pays Starbucks for its branding and equipment, but students are demanding that the University choose a tax-paying alternative.

A computer science student, William Squires, said:

"It’s appalling that Starbucks haven’t paid anything towards our public services in the last three years when we’ve been hit so hard."

Zoe Paterson added:

"It’s ridiculous that the government justifies cutting winter fuel allowance, which keeps the elderly from freezing to death, by claiming ‘there’s no money left’, whilst allowing massive corporations to get away with billions of pounds worth of tax."

Tax dodging firms and very wealthy individuals avoid paying around £25bn in tax each year by using loopholes and accountancy tricks to hide their profit, income or wealth. This forms part of a £120bn tax gap that could be plugged to vastly reduce the deficit, rather than cutting spending on public services or by increasing the level of tax that is supposed to be paid. Simply by taking strong action to ensure that companies and people pay the amount of tax they are supposed to, we could stop the cuts from happening.

UK Uncut action - December 8:

On Saturday 8 December, UK Uncut have a national day of action, and in Birmingham people will meet at 12:30 at the Post Office on Pinfold Street to pay a visit to the Starbucks on Colmore Row by Victoria Square. This day of action is calling specific attention to how cuts are affecting women and women’s services, such as cuts to funding and housing benefit that are causing women’s refuges to close.

The event will run until 2pm, when UK Uncut will join the Boycott Workfare demonstration happening in town that day.
Please join and invite your friends to the facebook event.


(Abusive or off-topic comments will be deleted)



Play video: Why cuts are the wrong cure
VIDEO: Why cuts are the wrong cure