Wednesday, November 14, 2012
CBS MoneyWatch: Why Starbucks' Tax Claims Don't Wash:
Members of Britain's Parliament on Monday grilled executives from Amazon, Google and Starbucks over the companies' failure to pay much in the way of corporate taxes in the U.K. ... Perhaps most absurd was the performance Starbucks' Chief Financial Officer for the U.K., Troy Allstead. On sales of $4.7 billion, Starbucks had paid only $13 million in corporate taxes because, Allstead maintained, the company hadn't turned a profit in more than a decade of operating in the U.K. This, it has to be said, provoked widespread incredulity. If the company wasn't making money here, why did it stay? Allstead squirmed and argued that Starbucks "must be in the U.K. to be a successful global company" and said that they had "tremendous optimism" about the business here.
That argument, of course, carries no weight. Everyone knows Starbucks wouldn't be in Britain if it didn't make money. It beggars the imagination to think that the coffee franchise has proliferated around the country just to maintain a declining brand presence or to provide the social advantage of employment. That the company pays a 6% royalty to the company's headquarters conveniently located in the Netherlands, a tax haven for companies, seems to suggest that business isn't, after all, that bad. But the idea that Starbucks is just here for the good of British coffee drinkers is risible.