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Starbucks also makes very little net margin the US, and as an entity pays very little in taxes directly, but that does not mean that the US does not make a lot

Starbucks also makes very little net margin the US, and as an entity pays very little in taxes directly, but that does not mean that the US does not make a lot of tax revenue from Starbucks. After cost of goods, the gross margin is spent on operations like payroll, marketing, logistics, etc. Each entity in the line pays some form of tax (e.g. VAT in the UK, sales in the US), not to mention the billions in payroll taxes. It is also surprising that litigation would be seen as so cost-ineffective. Google gets sued 100s of times per year, and I suspect the UK government would have a lot more to gain than the typical claimant.

DanBC 12y ago
Hang on: In England sales tax - VAT - is a tax paid by the customer (although collected by the business). That is not Starbucks paying the tax, that's me as a customer paying the tax. Similarly for income taxes - I pay those as an employee although it is collected by the company. The company makes use of the UK infrastructure (roads; policing; education; etc) so they should consider paying a bit more tax. It's worse where a company charges the customer full UK VAT at 20% but pays a lower rate to some other country. (Not sure if this does actually happen, but I've heard it does. And I'm not sure if it's an intended part of the laws or a loophole.)
- chris_va 12y ago
  Maybe this is a semantic issue. At the end of the day, it doesn't matter if you or Starbucks wrote the UK government the tax check. None of Starbucks' money started with them, it all starts with the UK consumer. Without Starbucks the entity, £0 gets paid to the UK government for both VAT and payroll tax. With Starbucks the entity, a lot of money gets paid to the UK government. As a result, Starbucks generates a lot of tax revenue within the UK, regardless of whose name is on the check.
justincormack 12y ago
But the laws as enacted said they would pay much more tax than that. In the UK people complaining are domestic coffee shops that dont have the advantage of expensive tax lawyers and use of tax havens. Marketing and logistics are not VATable. Starbucks pay minimum wage pretty much, which means there are few payroll taxes, indeed their employees may well also be getting state benefits because they have low income. So pointing at some amount of tax they do pay is not very helpful. Their claim that the UK is simply an unprofitable market is also odd, why have they expanded so much if it is unprofitable, why don't they fire management for failing to make any money?

DanBC 12y ago

Hang on: In England sales tax - VAT - is a tax paid by the customer (although collected by the business). That is not Starbucks paying the tax, that's me as a customer paying the tax. Similarly for income taxes - I pay those as an employee although it is collected by the company. The company makes use of the UK infrastructure (roads; policing; education; etc) so they should consider paying a bit more tax. It's worse where a company charges the customer full UK VAT at 20% but pays a lower rate to some other country. (Not sure if this does actually happen, but I've heard it does. And I'm not sure if it's an intended part of the laws or a loophole.)

chris_va 12y ago
Maybe this is a semantic issue. At the end of the day, it doesn't matter if you or Starbucks wrote the UK government the tax check. None of Starbucks' money started with them, it all starts with the UK consumer. Without Starbucks the entity, £0 gets paid to the UK government for both VAT and payroll tax. With Starbucks the entity, a lot of money gets paid to the UK government. As a result, Starbucks generates a lot of tax revenue within the UK, regardless of whose name is on the check.

justincormack 12y ago

But the laws as enacted said they would pay much more tax than that. In the UK people complaining are domestic coffee shops that dont have the advantage of expensive tax lawyers and use of tax havens. Marketing and logistics are not VATable. Starbucks pay minimum wage pretty much, which means there are few payroll taxes, indeed their employees may well also be getting state benefits because they have low income. So pointing at some amount of tax they do pay is not very helpful. Their claim that the UK is simply an unprofitable market is also odd, why have they expanded so much if it is unprofitable, why don't they fire management for failing to make any money?