Outlook If you ask Stefano Pessina whether he pays enough tax, expect derision. Abuse. Chuntering that you simply don't understand how the world works. Next!Lately, the Italian chairman of Alliance Boots has been carping about the anti-business sentiment that is rife in the UK. The "general atmosphere" is barely tolerable, he grumbles. People don't show enough respect. And the state of the ice-cream. Don't get him started on the ice-cream.
Life's tough for billionaire private-equity kings. It's a wonder they put up with the rest of us.
Mr Pessina would certainly move abroad if he hadn't already done so (the company you may fondly regard as that nice chemists on the high street is headquartered in Zug, Switzerland and the takeover vehicle used to acquire the business via debt in 2007 is based in Gibraltar. Mr Pessina lives in Monte Carlo. When he isn't on the moon.)
Yesterday the company put forward finance director George Fairweather to take questions, perhaps because Mr Pessina was lost in space somewhere, or perhaps out of recognition that Mr Fairweather can at least do an impression of living in the same world as humans.
The company is doing well, despite the bias in law and in society against gigantically powerful corporations. Revenue and profits up smartly, recession be damned and the UK high street bit's holding its own despite the strife in the retail game.
On the issue of tax, Mr Fairweather played the usual defence – the irritating one. Alliance Boots is investing for the future (so what?). It is paying down debt (that it loaded on to the business in the first place).
It is reducing the pension deficit (why is it in deficit?). It pays national insurance (so does everyone). It collects VAT on purchases in stores (thanks awfully).
The reason why all this irks is that the company, and it is far from alone here, seems to expect credit for merely obeying the law.
Individuals who pay down a credit card and a mortgage in the same month don't expect to skirt income tax. Alliance Boots seems to think it should. Last year it paid £59m in corporation tax on profits of £637m. It will pay about the same on this year's £693m. That's a rate of 9 per cent, less than is paid by high street rivals such as Tesco or Marks & Spencer and way less than the official rate of 26 per cent.
By one estimate it has avoided £500m of tax in the past five years, an unfair advantage, perhaps.
Alliance Boots will say it is a very different company to those two with a far more international bent.
It's true. The company has sort of got a small point. But it might make it with a bit more charm. It could at least say that it understood why this sort of thing makes people cross. Could indicate that it can see why a company with such close links to the NHS must be seen to be pulling its weight.
If it isn't about to change its ways, then a change of tone would at least be nice.Reuse content