Storm brewing for coffee giants Starbucks

Photograph: Andrew Winning/Reuters
Photograph: Andrew Winning/Reuters

You can almost hear the shrieks over the double-skinny, tall, smooth, flytothemoonandletmeplayamongthestars mocha-lattes:

“The customers are revolting, the customers are revolting!”

Whatever you make of Starbucks’ totally legal methods of not paying any corporation tax and its seeming inability to make a profit on one  of the highest margin products in the world (up their with saffron and Bobby Charlton’s centre-parting in his heyday) you have to admire there PR team swinging into action and clearly having a lot of weight at Starbucks Towers.

But…have they created an even bigger problem now I wonder?

Following an outcry for the British media and public Starbucks is volunteering to pay £10m in taxes in each of the next two years as it attempts to win back customers following revelations that it has paid no corporation tax in the UK in the past three years.

Kris Engskov, managing director of Starbucks UK, said he was surprised by the public outcry at the company’s use of complex tax arrangements and vowed to make the payments to HM Revenue and Customs for two years even if the coffee chain failed to make a profit.

However, whilst this may well stem some of the negative tide, I can’t help but feel that many more customers will now find this “selective” approach to tax totally inexcusable. Starbucks could appear even more arrogant by offering this fiscal olive branch when the general public feel they have no such powers to make these decisions.

The shock announcement was made at the London Chamber of Commerce, where Engskov said: “I am announcing changes which will results in Starbucks paying higher corporation tax in the UK – above what is currently required by law.

“Specifically, in 2013 and 2014 Starbucks will not claim tax deductions for royalties or payments related to our intercompany charges.

“These decisions are the right things for us to do. We’ve heard that loud and clear from our customers.”

The issue here isn’t one of legality (whatever people may believe) it is one of perception. Do Starbucks look just as bad for now trying to invent their own rules in a time of such austerity in the UK?

It will be interesting to see how any planned action which has been threatened this weekend against the chain pans out.

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