'Close tax loopholes' to stop companies like Starbucks and Amazon avoiding tax, says campaigner

'Close tax loopholes' to stop companies like Starbucks and Amazon avoiding tax, says campaigner

Thursday, September 20, 2018

Starbucks has come under fire after it emerged that it paid just 2.8% tax on its £162 million profit.

The coffee chain paid only £4.5 million tax, leading Margaret Hodge to call for a boycott.

“People should stop using Starbucks until they pay their tax. Starbucks use our roads, employ people we educate and who need our health service, but they won’t pay for it. They should be ashamed,” she wrote on Twitter.

Jonathan Stevenson, a campaigner with social justice organisation Global Justice Now, joined Mike Graham on the talkRADIO mid-morning show, and said the government should “change the law around tax havens” to combat corporations avoiding tax.

Last month, it was reported that Amazon pad just £1.7 million in tax, despite its profits rising from  £24.3m to £72.3m.

It said the drop in tax was due to the rise staff receiving share-based payments.

 

'The UK is not powerless'

“UK booksellers pay 11 times more corporation tax than Amazon!” said Graham, referring to a report from last year that found booksellers pay 91p in corporation tax for every £100 of turnover, compared to Amazon’s 8p.

“Tax havens are a big part of this,” said Stevenson.

“The UK and the US run many of the tax havens around the world - this is what allows companies to base themselves offshore. We have to face that, we’re not powerless at all. We could change the law around tax havens.”

Last year, Amazon was accused of funnelling profits through a ‘shell’ company in Luxembourg to avoid tax in the US.

The European Commission billed Amazon for €250 million (£222 million) in back taxes. It did the same thing to Apple over its tax arrangements in Ireland the previous year.

 

'Close the loopholes'

“They’d [businesses] have lots of tricks,” continued Stevenson.

“But you need to close the loopholes on a case-by-case basis.

“There’s something called country by country reporting, and that’s where businesses have to disclose their profits in every country.

“That’s a way of preventing them internally hiding their profits so it looks like they don’t have to pay as much tax.”

“They pretend they haven’t had any profit in the UK to avoid that tax. It’s clearly rubbish, and I don’t know why they get away with it!” added co-presenter Daisy McAndrew.

“Clever accountants,” said Stevenson. “We’ve been cutting funding to HMRC, the tax collectors, that’s a massive false economy. It means we have less ability to collect these taxes rather than more.”

HMRC axed 150 offices last year to reduce running costs, and the cuts have raised concerns that it will not have the resources to deal with post-Brexit customs declarations.