Backlash against tax avoidance

20Cent

A few large multinationals have hit the news lately for their tax avoidance measures. Nothing illegal just their ability to avoid tax by moving money around and having lots of subsidiaries etc. Amazon, Starbucks, Google Vodafone and many others have been criticised, a group called UK uncut has protested at some of their stores. It has been discussed in the UK Parliament.

Now there seems to be a backlash, take a look at the top selling books on Amazon their reviews contain lots of people pledging not to use Amazon while it doesn't contribute to the economy.

The corporations seem to be getting the message this is a statement from Starbucks:
"We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more.

"As part of this we are looking at our tax approach in the UK. The company has been in discussions with HM Revenue & Customs for some time and is also in talks with the Treasury. We will release more details tomorrow."

http://www.guardian.co.uk/business/2012/dec/05/starbucks-corporation-tax-pledge?INTCMP=SRCH

Thanks mostly to social media people are taking their business elsewhere use the local coffee/book shop which does pay its fair share.

I think this will go the same way as being green did. There is a nexus where the damage caused by not complying is greater then the benefits. If more and more people avoid these companies because of this then it will become more beneficial for them to pay their own way. Maybe some kind of mark like the Guaranteed Irish or similar. A corporation contributing to the society in which it exists could become the new green!

What ye think?

golfball37

I think its a great idea to guilt people into paying their share. What really grates me is the likes of Pat Kenny & Joe Duffy don't pay income tax on their obscene earnings from RTE. Rather they set up a company which RTE pay for their services. They are taxed then at CT levels which is outrageous but 100% legal.

Tax avoidance schemes like this need to be looked at seeing as how we are into sharing pain.

karma_

20Cent wrote: »

A few large multinationals have hit the news lately for their tax avoidance measures. Nothing illegal just their ability to avoid tax by moving money around and having lots of subsidiaries etc. Amazon, Starbucks, Google Vodafone and many others have been criticised, a group called UK uncut has protested at some of their stores. It has been discussed in the UK Parliament.

Now there seems to be a backlash, take a look at the top selling books on Amazon their reviews contain lots of people pledging not to use Amazon while it doesn't contribute to the economy.

The corporations seem to be getting the message this is a statement from Starbucks:
"We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more.

"As part of this we are looking at our tax approach in the UK. The company has been in discussions with HM Revenue & Customs for some time and is also in talks with the Treasury. We will release more details tomorrow."

http://www.guardian.co.uk/business/2012/dec/05/starbucks-corporation-tax-pledge?INTCMP=SRCH

Thanks mostly to social media people are taking their business elsewhere use the local coffee/book shop which does pay its fair share.

I think this will go the same way as being green did. There is a nexus where the damage caused by not complying is greater then the benefits. If more and more people avoid these companies because of this then it will become more beneficial for them to pay their own way. Maybe some kind of mark like the Guaranteed Irish or similar. A corporation contributing to the society in which it exists could become the new green!

What ye think?

The buck stops with the UK government with this, all they have to do is close the loopholes that these corporations take advantage of. Yet they show a complete unwillingness to do so, and want the corporations to contribute voluntarily. Why?

20Cent

karma_ wrote: »

The buck stops with the UK government with this, all they have to do is close the loopholes that these corporations take advantage of. Yet they show a complete unwillingness to do so, and want the corporations to contribute voluntarily. Why?

What makes this interesting is that the backlash is coming from the consumers not the governments.

The Corinthian

golfball37 wrote: »

I think its a great idea to guilt people into paying their share. What really grates me is the likes of Pat Kenny & Joe Duffy don't pay income tax on their obscene earnings from RTE. Rather they set up a company which RTE pay for their services. They are taxed then at CT levels which is outrageous but 100% legal.

It's not as simple as that.

The money paid into the company may be taxed at a corporate level, but it's not in their wallets yet. For that, they would need to draw the money out as a salary, dividend, expense or similar - and there are plenty of limitations and taxes associated with all these options.

This is not to say that they're not better off than their average PAYE worker - absolutely they are - but PAYE is an appalling system if you're the one being taxed, to begin with.

Tax avoidance schemes like this need to be looked at seeing as how we are into sharing pain.

I'd favour abolishing 'at source' taxation and allow people to do their own taxes, like they do in the US and many other countries. Problem is most people can't be arsed; the amount of money PAYE workers can already get back on the tax they pay is not insignificant - if they bothered checking and actually applying for it. Most don't.

As such, anyone can already 'avoid' tax and to a degree going after those who take the time (or invest in a tax expert to do this for them) does smack to me somewhat as attempting to reward those too lazy to do so.

20Cent

The Corinthian wrote: »

It's not as simple as that.

The money paid into the company may be taxed at a corporate level, but it's not in their wallets yet. For that, they would need to draw the money out as a salary, dividend, expense or similar - and there are plenty of limitations and taxes associated with all these options.

This is not to say that they're not better off than their average PAYE worker - absolutely they are - but PAYE is an appalling system if you're the one being taxed, to begin with.

I'd favour abolishing 'at source' taxation and allow people to do their own taxes, like they do in the US and many other countries. Problem is most people can't be arsed; the amount of money PAYE workers can already get back on the tax they pay is not insignificant - if they bothered checking and actually applying for it. Most don't.

As such, anyone can already 'avoid' tax and to a degree going after those who take the time (or invest in a tax expert to do this for them) does smack to me somewhat as attempting to reward those too lazy to do so.

This isn't about individuals claiming tax relief and the like.
These corporations are able to pay little or no tax in the countries where they do most business. They are able to do this using the intentional aspect of their businesses and economies of scale. This is bad for the regular coffee or bookshops which cannot compete. A two pronged approach would be government taking action but also a change in the public mood where they will shop and support local businesses that do contribute to society rather than these companies which do not.

The Corinthian

20Cent wrote: »

This isn't about individuals claiming tax relief and the like.
These corporations are able to pay little or no tax in the countries where they do most business. They are able to do this using the intentional aspect of their businesses and economies of scale.

To begin with, I was responding to golfball37's comments regarding using a corporation to better handle tax and personal tax strategies in general, not the question of multi-national corporations paying minimal tax.

Secondly, Ireland has low corporation tax that facilitates this, and it does so because this policy (which we arrived at accidentally, I might add) was found to encourage FDI and the creation of jobs (which in turn fill the public purse through employee income tax).

Now, Ireland could turn the screws on such shenanigans, but that would result in making Ireland less attractive to FDI - even to the point of our losing some of the existing multinationals.

In short, it's not in our interests to do anything. It's in the interests of countries like the US, who are not only not getting the tax revenue, but neither are they getting the employment benefits (as they're coming here), but for us, it's a lose-lose if we act against it.

Sorry to sound cynical, but that's Realpolitik for you.

This is bad for the regular coffee or bookshops which cannot compete. A two pronged approach would be government taking action but also a change in the public mood where they will shop and support local businesses that do contribute to society rather than these companies which do not.

Do you know how many small indigenous companies are dependant on the multinationals in Ireland? Cleaners, local restaurants, bars and delis, recruitment agencies, taxi companies, caterers, security or legal firms... the list is endless.

Some form of 'buy local' campaign is a nice idea, but I'm not sure if it would get much traction in the current economic climate; if things are tight at home, are you going to buy a book on Amazon for €10 or in the local family-run bookshop, for €18?

20Cent

and so it starts:

http://news.sky.com/story/1021646/starbucks-tax-row-10m-climbdown

The company's UK Managing Director Kris Engskov said: "Having listened to customers and to the British public, Starbucks in the UK will be making changes which will result in the company 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."

A company statement continued: "In addition, he is announcing a commitment that Starbucks will propose to pay a significant amount of corporation tax in the UK during 2013 and 2014 regardless of whether our company is profitable during these years."

Starbucks estimates its changes will cost the firm an estimated £10m in extra tax annually over the next two years and has said it hasn't made profits in the UK.

JustinDee

golfball37 wrote: »

I think its a great idea to guilt people into paying their share. What really grates me is the likes of Pat Kenny & Joe Duffy don't pay income tax on their obscene earnings from RTE. Rather they set up a company which RTE pay for their services. They are taxed then at CT levels which is outrageous but 100% legal.

Tax avoidance schemes like this need to be looked at seeing as how we are into sharing pain.

Tax avoidance also yields jobs and boosts our local economy.

Intel, IBM, Google, eBay, PayPal etc are all here for self-serving reasons yet Ireland still benefits in a major, and hopefully ne'er for the changing, way.
If Intel pulled out of Leixlip, for example it would be absolutely devastating for North Kildare and West Dublin. Around 5,000 employees work there and regional business, industry and structure all benefits strongly from its presence. In actual fact, Ireland likes tax avoidance as it keeps it healthy and busy.

20Cent

JustinDee wrote: »

Tax avoidance also yields jobs and boosts our local economy.

Not really, it kills local business how can a small coffee shop compete with a multinational that pays no tax. It can't.

beeftotheheels

The big issue is that we already have a tax on consumption - it is called VAT. Glad to see Bill agreed with me for once - given I don't think we ever did in person.

http://www.bbc.co.uk/news/business-20580545

The issue here is that B2C (Business to Consumer) transactions involving "goods" are already taxed in the consumer's State (subject to the distance selling rules but all the MNCs breach those) whereas the B2C transactions involving services (including e-commerce) are taxed in the "home state" of the supplier i.e. Luxembourg at a 3% rate in the case of Amazon.

Loads of gaming companies have set up in Ireland for our 12.5% CT rate without realizing that our 23% VAT rate puts pressure on their margins relative to Luxembourg at 3%.

But from 2015 all B2C transactions will be VATable where the customer is, so Luxembourg's charm will be lost, our shooting ourselves in the foot will be negated, and the State where the customer is will reek the most tax. And all will be well with the world.

GSF

Why should anyone pay tax they don't owe? Starbucks will end up getting a refund lus interest from HMRC in the UK for their stunt down the line

southsiderosie

20Cent wrote: »

A few large multinationals have hit the news lately for their tax avoidance measures. Nothing illegal just their ability to avoid tax by moving money around and having lots of subsidiaries etc. Amazon, Starbucks, Google Vodafone and many others have been criticised, a group called UK uncut has protested at some of their stores. It has been discussed in the UK Parliament.

Now there seems to be a backlash, take a look at the top selling books on Amazon their reviews contain lots of people pledging not to use Amazon while it doesn't contribute to the economy.

The corporations seem to be getting the message this is a statement from Starbucks:
"We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more.

"As part of this we are looking at our tax approach in the UK. The company has been in discussions with HM Revenue & Customs for some time and is also in talks with the Treasury. We will release more details tomorrow."

http://www.guardian.co.uk/business/2012/dec/05/starbucks-corporation-tax-pledge?INTCMP=SRCH

Thanks mostly to social media people are taking their business elsewhere use the local coffee/book shop which does pay its fair share.

I think this will go the same way as being green did. There is a nexus where the damage caused by not complying is greater then the benefits. If more and more people avoid these companies because of this then it will become more beneficial for them to pay their own way. Maybe some kind of mark like the Guaranteed Irish or similar. A corporation contributing to the society in which it exists could become the new green!

What ye think?

I think this situation is quite similar to the position Nike found itself in about ten years ago when it came under fire for its sweatshop practices in Asia. Like Starbucks, Nike wasn't actually the worst offender, but they were the most visible MNC and the most image-conscious. That sparked a series of voluntary agreements, international watchdog groups, etc.

Yet despite all of this agitating, institutional creation, etc, working conditions in many textile factories are still deplorable; there have been several high-profile factory fires in Pakistan and Bangladesh - and in at least one case, the facility had received a positive evaluation from one of the monitoring NGOs.

The bottom line is, if governments want companies to pay taxes and adhere to labor, health, and safety laws, then they need to actually make - and more importantly enforce - laws that force companies to be compliant. Relegating responsibility to NGOs or MNCs themselves is both an abdication of their responsibility to act in the interest of citizens and in the case of self-monitoring, akin to assigning a fox to guard the henhouse.

southsiderosie

20Cent wrote: »

Not really, it kills local business how can a small coffee shop compete with a multinational that pays no tax. It can't.

This is also not true. Starbucks essentially created a mass market for $4 coffee. Today, mom and pop coffee shops are actually doing better than Starbucks in many markets because they can charge at or above Starbucks' already high price point but 1) they make better coffee and 2) they have the flexibility to design their stores however they want.

who the fug

karma_ wrote: »

The buck stops with the UK government with this, all they have to do is close the loopholes that these corporations take advantage of. Yet they show a complete unwillingness to do so, and want the corporations to contribute voluntarily. Why?

Because it is pointless Multinationals will always work there way around tax law, better way is to hit their sales

20Cent

southsiderosie wrote: »

This is also not true. Starbucks essentially created a mass market for $4 coffee. Today, mom and pop coffee shops are actually doing better than Starbucks in many markets because they can charge at or above Starbucks' already high price point but 1) they make better coffee and 2) they have the flexibility to design their stores however they want.

One business pays 0% tax the other pays full. Not a level playing field. Per shop maybe the small business has a better return but how many were put out of business or didn't consider starting one because there were four starbucks in the area? A lot I'd say. The more people boycott these freeloaders the better.

southsiderosie

20Cent wrote: »

One business pays 0% tax the other pays full. Not a level playing field. Per shop maybe the small business has a better return but how many were put out of business or didn't consider starting one because there were four starbucks in the area? A lot I'd say. The more people boycott these freeloaders the better.

Then you need to show us some proof of that, because as in the article I posted, most business analysts note that Starbucks created a mass market for premium coffee, but small coffee shops can make better premium coffee than Starbucks - who, by the way, closed over 600 outlets in the US last year. Insisting over and over again that Starbucks is crushing locally owned business does not make it so.

In addition, corporate tax is not the only expense that large companies have. Starbucks provides health insurance for part-time employees in the US - something that mom and pops generally do not do.

Finally, this still does not address my broader point - Starbucks doesn't pay a lot of tax because it isn't required to, and, frankly, I think that demanding that they do so voluntarily is absurd. If citizens want corporations to pay more tax, then they need to push politicians to change the tax laws for all large companies rather than browbeating one of the few multinationals that is relatively sensitive about this sort of thing.

AltAccount

Will hitting the sales, and therefore profitability, of these MNCs make them want to increase their costs or decrease them?

If those costs include taxes, wages and contributory pension schemes, who do you expect to bear the brunt of these changes?

If you shut Amazon tomorrow, where do you think the customers would end up - another website, in Waterstones/HMV or in a local book/CD/DVD shop?

If you shut all the Starbucks in the country, do you think they'd be replaced by mom and pop coffee shops on a one-for-one basis, or do you think there'd be a proportion of ex-Starbucks employees made redundant? What proportion?

20Cent

southsiderosie wrote: »

Then you need to show us some proof of that, because as in the article I posted, most business analysts note that Starbucks created a mass market for premium coffee, but small coffee shops can make better premium coffee than Starbucks - who, by the way, closed over 600 outlets in the US last year. Insisting over and over again that Starbucks is crushing locally owned business does not make it so.

In addition, corporate tax is not the only expense that large companies have. Starbucks provides health insurance for part-time employees in the US - something that mom and pops generally do not do.

Finally, this still does not address my broader point - Starbucks doesn't pay a lot of tax because it isn't required to, and, frankly, I think that demanding that they do so voluntarily is absurd. If citizens want corporations to pay more tax, then they need to push politicians to change the tax laws for all large companies rather than browbeating one of the few multinationals that is relatively sensitive about this sort of thing.

Thread is about the UK not the US.

One coffee shop pays zero tax another pays full, not fair.
Capitalism is about people spending their money where they want to. If being a contributing business for society is a decider for where people take their business then freeloaders like starbucks better start paying up.

JustinDee

20Cent wrote: »

Not really, it kills local business how can a small coffee shop compete with a multinational that pays no tax. It can't.

Yes really. Hence the transformation of North Kildare, West Dublin region I mentioned thanks to Intel and Hewlett-Packard setting up and staying there.

As for your coffee analogy, take a look at the kiosk on Pembroke Rd/Northumberland Rd in Dublin and the roaring trade he does. Surely he must be miles from the nearest big bad evil big fellas? Nope. They're nearby on Shelbourne Rd. People will buy what they want. If you want to gauge the effects on the consumer of protectionism, then see Norway and its cosy govt protected cartels.
Weak coffee, '20 Cent'.

20Cent

Looks like Stabucks agree, public pressure has resulted in them changing their tax avoidance ways.
Still not enough though why should one company get to "negotiate" how much tax they pay while everyone else just pays up!



Ground down: Starbucks pledges to pay £20m tax over next two years
http://www.independent.ie/business/ground-down-starbucks-pledges-to-pay-20m-tax-over-next-two-years-3318242.html

Mr Engskov said Starbucks had always organised its tax affairs "according to the letter of the law" and added "the emotion of the issue has taken us a bit by surprise".

"These decisions are the right things for us to do," he said. "We've heard that loud and clear from our customers. And today, we're taking the actions necessary to pay more corporation tax in the UK."

20Cent

JustinDee wrote: »

Yes really. Hence the transformation of North Kildare, West Dublin region I mentioned thanks to Intel and Hewlett-Packard setting up and staying there.

As for your coffee analogy, take a look at the kiosk on Pembroke Rd/Northumberland Rd in Dublin and the roaring trade he does. Surely he must be miles from the nearest big bad evil big fellas? Nope. They're nearby on Shelbourne Rd. People will buy what they want. If you want to gauge the effects on the consumer of protectionism, then see Norway and its cosy govt protected cartels.
Weak coffee, '20 Cent'.

Starbucks UK managing director Kris Engskov disagrees with you.

JustinDee

20Cent wrote: »

Starbucks UK managing director Kris Engskov disagrees with you.

It's a popularity contest and nothing more. PR.
Your argument against foreign corporations following incentivised locations is too tilted. The catastrophic effects of chasing them away would damage the local economy more than you could bother to contemplate.

AltAccount

20Cent wrote: »

Starbucks UK managing director Kris Engskov disagrees with you.

You do realise that to him, that's not a "we should pay more tax because it's the right thing to do" decision, it's a marketing decision - they're buying goodwill, just like a bank sponsoring junior rugby.

I don't believe you're proving any particular point with this example.

KyussBishop

While Starbucks may not be a perfect example, since they charge a premium for their coffee rather than competing price-wise, it is undeniable that there's a greshams dynamic at play, where large companies that legally flout the tax rates (through avoidance), can become more competitive through that, and can force other companies into tax avoidance as well, just to stay competitive (if they are experiencing disproportionate competition, which for coffee outlets doesn't seem the case).

Since the accounting trickery involved also comes at a premium, it also biases in favour of larger corporations, compared to smaller business.

southsiderosie

20Cent wrote: »

Thread is about the UK not the US.

One coffee shop pays zero tax another pays full, not fair.
Capitalism is about people spending their money where they want to. If being a contributing business for society is a decider for where people take their business then freeloaders like starbucks better start paying up.

How is Starbucks a freeloader? They are paying the legal tax rate set by a democratically elected government. The onus here is on the government, not the company.

In addition, you still have not addressed my point about Starbucks creating a market for mom and pops to exploit.

20Cent

JustinDee wrote: »

It's a popularity contest and nothing more. PR.
Your argument against foreign corporations following incentivised locations is too tilted. The catastrophic effects of chasing them away would damage the local economy more than you could bother to contemplate.

I dont think starbucks will leave the uk because they have to pay some tax and if they did it would jardly be catastrophlc people could get their coffee somewhere else

20Cent

AltAccount wrote: »

You do realise that to him, that's not a "we should pay more tax because it's the right thing to do" decision, it's a marketing decision - they're buying goodwill, just like a bank sponsoring junior rugby.

I don't believe you're proving any particular point with this example.

I totally know that its a marketing decision thats the point made in the op. The bad publicity about being freeloaders outweighs the additional profits made by avoiding the taxes everyone else pays.

20Cent

southsiderosie wrote: »

How is Starbucks a freeloader? They are paying the legal tax rate set by a democratically elected government. The onus here is on the government, not the company.

In addition, you still have not addressed my point about Starbucks creating a market for mom and pops to exploit.

I agree with u it should be up to the gov but since they are not doing it the public are voting with their feet
They are freeloaders because they pay no tax. This is legal of course but their still freeloaders.

Good loser

20Cent wrote: »

I agree with u it should be up to the gov but since they are not doing it the public are voting with their feet
They are freeloaders because they pay no tax. This is legal of course but their still freeloaders.

I presume all the 'shops' are run by franchisees - guess these will pay the same taxes regardless of what parent Starbucks does.

20Cent

Good loser wrote: »

I presume all the 'shops' are run by franchisees - guess these will pay the same taxes regardless of what parent Starbucks does.

Taxation should not distort markets to favor one over the other in competing businesses.


Looks like Stabucks in response to the public revulsion at their unfair practices have "decided" to pay some tax. They even get to decide how much! Isn't that great for them pity everyone can't decide how much they want to pay!


http://www.guardian.co.uk/commentisfree/2012/dec/06/starbucks-corporation-tax-uk?INTCMP=SRCH

JustinDee

20Cent wrote: »

Taxation should not distort markets to favor one over the other in competing businesses

Rubbish. It is a competitive force.
Its as if you want the worst possible scenario for Ireland. No corporation tax welcomes, no foreign investment etc etc.
You change the tax incentives for foreign corporations here and you will make them think twice about staying or coming in the first place.
There's a reason that the likes of Boston Scientific, TalkTalk, IBM, Microsoft have moved certain operations to other countries thus leaving vacuums of unemployment in their wake.
Regarding Starbucks, you complain as if they do not grant franchises to Irish people and that these franchisees do not employ anyone but citizens of Seattle.

Again, I'll remind you that the news you're repeating is a PR 'accession' and nothing more.

20Cent

JustinDee wrote: »

Rubbish. It is a competitive force.
Its as if you want the worst possible scenario for Ireland. No corporation tax welcomes, no foreign investment etc etc.
You change the tax incentives for foreign corporations here and you will make them think twice about staying or coming in the first place.
There's a reason that the likes of Boston Scientific, TalkTalk, IBM, Microsoft have moved certain operations to other countries thus leaving vacuums of unemployment in their wake.
Regarding Starbucks, you complain as if they do not grant franchises to Irish people and that these franchisees do not employ anyone but citizens of Seattle.

Again, I'll remind you that the news you're repeating is a PR 'accession' and nothing more.

It is a PR exercise never said it was anything else. Its interesting from the view that it came about from listening to their customers as opposed to being enforced on them by the Gov which is the way it should be. Hence the title of the thread the op and other points made.

From the hoses mouth:

I am confident these actions, when taken together, will position us as a company to make a larger contribution to the exchequer and most importantly to the communities we serve while we make the moves necessary to achieve a sustainable level of profitability.

These decisions are the right things for us to do. We've heard that loud and clear from our customers. And, today, we're taking the actions necessary to pay more corporation tax in the UK.

JustinDee

20Cent wrote: »

It is a PR exercise never said it was anything else ... etc etc ...

Some of the other things you've said when having the benefits of tax incentives explained to you, don't do your argument much good with regards credibility.

spank_inferno

I did find it amusing hearing a parlimentary commitee berating the CEOs of Starbucks, Amazon etc on availing of loopholes the very same MPs could work to prevent happening in the first place.

You would think that corporation tax policy came from on-high and could not be changed.

20Cent

JustinDee wrote: »

Some of the other things you've said when having the benefits of tax incentives explained to you, don't do your argument much good with regards credibility.

Are tax incentives required to sell coffee or books?
They did just fine before, surely if it is needed then it should apply to all coffee/book shops then.

JustinDee

20Cent wrote: »

Are tax incentives required to sell coffee or books?
They did just fine before, surely if it is needed then it should apply to all coffee/book shops then.

You mentioned "multinationals" at the beginning of the thread. I gave you examples of "multinationals" who were absolutely beneficial to the country and regions they were set up in. Your argument against tax incentivisation was poor, given these examples.
The presence of Starbucks, despite your claim that it has, actually hasn't forced a negative on the market (I gave you an example of 'Coffee Kiosk' in Ballsbridge). What their presence does is add choice for the consumer.

You seem a tad lost on what apparently is irking you. The presence of a multinational? Or the fact that there are corporations making avail of tax incentivies. Your claim that "Taxation should not distort markets to favor one over the other in competing businesses" is, in no other wording possible, just a big bowl of wrong.

You've also yet to prove that protectionism (as undertaken in Norway, for example) benefits the consumer too.

KyussBishop

JustinDee wrote: »

Rubbish. It is a competitive force.
Its as if you want the worst possible scenario for Ireland. No corporation tax welcomes, no foreign investment etc etc.
You change the tax incentives for foreign corporations here and you will make them think twice about staying or coming in the first place.
There's a reason that the likes of Boston Scientific, TalkTalk, IBM, Microsoft have moved certain operations to other countries thus leaving vacuums of unemployment in their wake.
Regarding Starbucks, you complain as if they do not grant franchises to Irish people and that these franchisees do not employ anyone but citizens of Seattle.

Again, I'll remind you that the news you're repeating is a PR 'accession' and nothing more.

Conversely, it's like you want Ireland leeching off other countries tax returns, to push them into a race-to-the-bottom to compete tax-wise; it's simply not going to last, because other countries are increasingly clamping down on tax evasion/avoidance, and eventually Ireland is going to be forced by other countries, to raise corporation tax, or loopholes will simply be closed such that we get diminishing returns from it.

Our corporation tax is not going to last in the long run, and we are totally squandering its benefits, because we need to setup the right environment for these multinationals to stay despite the inevitable rise in corporation tax in the future, which we are losing the opportunity for through austerity.

It's also been described exactly how tax avoidance distorts markets earlier:

KyussBishop wrote: »

While Starbucks may not be a perfect example, since they charge a premium for their coffee rather than competing price-wise, it is undeniable that there's a greshams dynamic at play, where large companies that legally flout the tax rates (through avoidance), can become more competitive through that, and can force other companies into tax avoidance as well, just to stay competitive (if they are experiencing disproportionate competition, which for coffee outlets doesn't seem the case).

Since the accounting trickery involved also comes at a premium, it also biases in favour of larger corporations, compared to smaller business.

JustinDee

KyussBishop wrote: »

Conversely, it's like you want Ireland leeching off other countries tax returns, to push them into a race-to-the-bottom to compete tax-wise; it's simply not going to last, because other countries are increasingly clamping down on tax evasion/avoidance, and eventually Ireland is going to be forced by other countries, to raise corporation tax, or loopholes will simply be closed such that we get diminishing returns from it

Any apparent "clamping down" you mention is the tip of the iceberg. Being seen to act upon the cause-du-jour while carrying on elsewhere. Minimal effort despite self-serving measures to the contrary. You also talk as if the presence of overseas corporation in this circumstance is a negative. Do you actually believe the guff about relocating here due to being English speakers and of an alleged high standard of education?
Its about money. There is no long-term investment in any strand of industry in this day and age, as nothing is guaranteed. You get them in, keep them happy and reap your rewards via employment, development of a region. 'Austerity' has sweet eff all to do with this.

KyussBishop wrote: »

Our corporation tax is not going to last in the long run, and we are totally squandering its benefits, because we need to setup the right environment for these multinationals to stay despite the inevitable rise in corporation tax in the future, which we are losing the opportunity for through austerity

You do not know that. It is a risk but most certainly nowhere near the certainty you attempt to portray.

KyussBishop wrote: »

It's also been described exactly how tax avoidance distorts markets earlier:

Shaping is not "distorting". You yourself mention that pricing is part of the equation here when discussing the Starbucks example. There are many more factors involved in how these markets behave or are affected.

southsiderosie

20Cent wrote: »

It is a PR exercise never said it was anything else. Its interesting from the view that it came about from listening to their customers as opposed to being enforced on them by the Gov which is the way it should be.

What? So companies should only respond to market forces (i.e. customers) and the government should stay out of it? This is an odd position given your other posts in this forum - have you suddenly become libertarian overnight?

20Cent

JustinDee wrote: »

You mentioned "multinationals" at the beginning of the thread. I gave you examples of "multinationals" who were absolutely beneficial to the country and regions they were set up in. Your argument against tax incentivisation was poor, given these examples.
The presence of Starbucks, despite your claim that it has, actually hasn't forced a negative on the market (I gave you an example of 'Coffee Kiosk' in Ballsbridge). What their presence does is add choice for the consumer.

You seem a tad lost on what apparently is irking you. The presence of a multinational? Or the fact that there are corporations making avail of tax incentivies. Your claim that "Taxation should not distort markets to favor one over the other in competing businesses" is, in no other wording possible, just a big bowl of wrong.

You've also yet to prove that protectionism (as undertaken in Norway, for example) benefits the consumer too.

The thread is about a few multinationals in the UK paying no taxes not multinationals in general. I don't know why your mentioning Intel etc or Ireland its nothing to do with the point made in the op.

One business pays zero tax another in the same market is paying in full. Don't see how anyone can justify that.

Tax incentives are also a different issue to the topic in the op.

20Cent

southsiderosie wrote: »

What? So companies should only respond to market forces (i.e. customers) and the government should stay out of it? This is an odd position given your other posts in this forum - have you suddenly become libertarian overnight?

Public opinion or the market is doing what the Gov should be doing.
No I don't think I'll ever become a libertarian

KyussBishop

JustinDee wrote: »

KyussBishop wrote:

Conversely, it's like you want Ireland leeching off other countries tax returns, to push them into a race-to-the-bottom to compete tax-wise; it's simply not going to last, because other countries are increasingly clamping down on tax evasion/avoidance, and eventually Ireland is going to be forced by other countries, to raise corporation tax, or loopholes will simply be closed such that we get diminishing returns from it

Any apparent "clamping down" you mention is the tip of the iceberg. Being seen to act upon the cause-du-jour while carrying on elsewhere. Minimal effort despite self-serving measures to the contrary. You also talk as if the presence of overseas corporation in this circumstance is a negative. Do you actually believe the guff about relocating here due to being English speakers and of an alleged high standard of education?
Its about money. There is no long-term investment in any strand of industry in this day and age, as nothing is guaranteed. You get them in, keep them happy and reap your rewards via employment, development of a region. 'Austerity' has sweet eff all to do with this.

Nothing bar the first sentence here, makes sense as a reply in the context of my post; this clamping down is going to be a long term progressive change in taxation internationally, where all tax havens are going to meet a greater squeeze.

Reiterating my last post: We are pretty much just leeching off other countries tax returns, promoting a 'race-to-the-bottom' in taxes; that's not sustainable for any nation, in the long run.

JustinDee wrote: »

KyussBishop wrote:

Our corporation tax is not going to last in the long run, and we are totally squandering its benefits, because we need to setup the right environment for these multinationals to stay despite the inevitable rise in corporation tax in the future, which we are losing the opportunity for through austerity

You do not know that. It is a risk but most certainly nowhere near the certainty you attempt to portray.

The problem of tax avoidance/evasion is going to be a problem as long as it is around, so it's not going to stop being a prominent issue, and steps to tackle it are only going to escalate.

Ireland needs to focus on making this a good environment for multinationals to stay, despite the corporation tax, not because of it; we are significantly failing to do that, which is going to come back and bite us some day, when (and it is an inevitability, as it's an issue that is only growing in public discourse) other countries, like the UK, start cracking down on corporate tax evasion.

JustinDee wrote: »

Shaping is not "distorting". You yourself mention that pricing is part of the equation here when discussing the Starbucks example. There are many more factors involved in how these markets behave or are affected.

Shaping and distorting seem to be two obfuscatory words that don't really mean anything; what exact distinction do they have, and how is one 'bad' and the other 'good'?

My previous post, which I'll requote here:

KyussBishop wrote: »

While Starbucks may not be a perfect example, since they charge a premium for their coffee rather than competing price-wise, it is undeniable that there's a greshams dynamic at play, where large companies that legally flout the tax rates (through avoidance), can become more competitive through that, and can force other companies into tax avoidance as well, just to stay competitive (if they are experiencing disproportionate competition, which for coffee outlets doesn't seem the case).

Since the accounting trickery involved also comes at a premium, it also biases in favour of larger corporations, compared to smaller business.

This previous post explains well how tax avoidance creates a 'race-to-the-bottom' type situation, in both taxation in countries, and in company payment of taxes (where, increasingly, some companies have to engage in tax avoidance, just to stay competitive), and it also explains how greater affordability of tax avoidance for larger companies, skews the market in their favour versus smaller competitors.

That has a lot of negative effects on many markets: assisting in leeching other countries taxes (like the UK in the OP), pressuring other markets to drop corporate tax to compete, pressuring companies to engage in tax avoidance in order to compete, and creating an advantage for larger companies which can better afford the resources for tax avoidance.

These are greedy, short-sighted and unethical policies, with a lot of negative market and social effects, that we as a country are too stupid to even capitalize on, to improve our local business environment and infrastructure, in order to hold-on to these multinationals, for when we inevitably lose our corporation tax advantage in the future.

It's the essence of short-term thinking, squandering our temporary advantage now at the expense of countries and people everywhere else, without even preparing for our own future, when other countries get tired of our greediness.

JustinDee

20Cent wrote: »

The thread is about a few multinationals in the UK paying no taxes not multinationals in general. I don't know why your mentioning Intel etc or Ireland its nothing to do with the point made in the op

The thread is about tax avoidance, and Ireland with a few corporations named was introduced as an example of the positive effects of corporations making avail of tax incentives ie. tax avoidance.

20Cent

JustinDee wrote: »

The thread is about tax avoidance, and Ireland with a few corporations named was introduced as an example of the positive effects of corporations making avail of tax incentives ie. tax avoidance.

It can also have negative effects like distorting competition.
In the case of Starbucks in the UK even the managing director has acknowledged this.

JustinDee

20Cent wrote: »

It can also have negative effects like distorting competition.
In the case of Starbucks in the UK even the managing director has acknowledged this.

Give an example of this distortion of yours here. I've given you an example of Starbucks in a busy competitive part of Dublin.

southsiderosie

20Cent wrote: »

The thread is about a few multinationals in the UK paying no taxes not multinationals in general. I don't know why your mentioning Intel etc or Ireland its nothing to do with the point made in the op.

One business pays zero tax another in the same market is paying in full. Don't see how anyone can justify that.

Tax incentives are also a different issue to the topic in the op.

Eh, hang on a sec here. Your OP says, towards the end:

20Cent wrote: »

I think this will go the same way as being green did. There is a nexus where the damage caused by not complying is greater then the benefits. If more and more people avoid these companies because of this then it will become more beneficial for them to pay their own way. Maybe some kind of mark like the Guaranteed Irish or similar. A corporation contributing to the society in which it exists could become the new green!

What ye think?

You've opened the door to talk about companies other than Starbucks and companies in Ireland. Why are you trying to shift the goalposts?

20Cent

JustinDee wrote: »

Give an example of this distortion of yours here. I've given you an example of Starbucks in a busy competitive part of Dublin.

One coffee shop pays not tax another pays full tax its very clear what the distortions is.

20Cent

southsiderosie wrote: »

Eh, hang on a sec here. Your OP says, towards the end:



You've opened the door to talk about companies other than Starbucks and companies in Ireland. Why are you trying to shift the goalposts?

Thought it was clear what I was referring to in the op didn't think I'd have to qualify it by stating that I was referring to a particular instance rather than every multinational in every country which is stretching it to be fair.

repsol

20Cent wrote: »

One coffee shop pays not tax another pays full tax its very clear what the distortions is.

The problem is although people keep moaning about Starbucks they keep going in and spending their cash.Big companies don't listen to moaners,they only look at the bottom line.If you want them to listen,you have to cut off their cash flow.

20Cent

repsol wrote: »

The problem is although people keep moaning about Starbucks they keep going in and spending their cash.Big companies don't listen to moaners,they only look at the bottom line.If you want them to listen,you have to cut off their cash flow.

Totally agree with you that's the point made in the op.
In this case the big company did listen to the "moaners".