Mark Steel: What a triumph! We’ve persuaded Starbucks to relocate its European headquarters to Britain. Mine’s an extra shot of tax avoidance

Our tax regime couldn’t possibly have anything to do with the move, could it?


One of the first rules of economics is that if an international organisation bases itself in the UK, this is good for business, good for jobs and good for Britain. Al Qa’ida could announce they were relocating their headquarters to Swindon, and a minister would appear on the news to, “This is a marvellous boost to the economy, providing up to 500 jobs, with the excellent news that each year many of the clerical grades are required to blow themselves up, resulting in a constant demand for new staff.”

So now that Starbucks have announced they’re moving their European and African headquarters from Holland to London, we should be delighted. Colin Stanbridge, chief executive of the London Chamber of Commerce, was on BBC news explaining that this was a “ringing endorsement for London”, providing “tax revenue and jobs”.

But Richard Murphy, a tax researcher, explained the move might be because George Osborne changed the tax laws, so now if a company is based here, the amount of tax it pays on its global profits is nothing. If you were a cynic, you might think that figure of nothing was part of what swayed Starbucks to come here.

But more likely it was because the managing director loves the pubs up the Old Kent Road, so it’s definitely a ringing endorsement for London.

Still, it shows the policy has worked, because if the law hadn’t been changed, Starbucks would probably have stayed in Holland and then we wouldn’t receive anything at all, whereas this way at least we get nothing.

Starbucks seem to be so busy pouring coffees they often don’t have time to pay much tax. From 1998 to 2012, despite sales in Britain that reached 3 billion dollars, they paid £8.3 million corporation tax, about 0.3 per cent or something like that. When this was revealed two years ago there was a series of protests and a boycott was proposed, so they agreed to pay another £20 million, because “we’ve heard these complaints loud and clear.”

So this amounts to a simplified tax system, whereby a company pays the amount of tax it fancies. This saves all that faffing about with working out your profit and adding up lots of silly numbers. How much bureaucracy could be saved if we replaced the whole tax regime like that, so instead of all these accountants, companies just handed over a wad when they thought people were getting cross with them.

The British economy would be run like a family from London in the 1970s, with no tax coming in for months, then when we all complained they’d slip us 20 million and go, “There you go doll, get yerself summink nice. You could buy yourself an ’ansome little primary school wiv that, treat yerself”.

Maybe we should try a similar method with shops. Each week you fill a trolley with groceries, occasionally popping a quid into the till, until the store manager gets annoyed, then you say. “All right, here’s 50 quid, we’ve heard your complaints loud and clear”.

It might seem only fair if the trial run for this sort of exchange took place in Starbucks. You get yourself a coffee and peculiar biscuit and refuse to pay until the manager jumps and down so much that they’ve made their complaint loud and clear.

But the British government doesn’t seem to mind. In fact it’s rewarded Starbucks with this latest change in the law, undercutting the low Dutch tax rates with a hard-to-beat nothing.

Presumably the Dutch will now try and seduce them back, with an even better offer, such as no tax, and a voucher for the coffee shop of their choice. Then we’ll try and trump that by offering Kate Winslet, they’ll chuck in Robin Van Persie, we’ll promise every Starbucks executive a place in the final of Britain’s Got Talent and eventually the winner can proudly announce they’ve won a ringing endorsement and loads of jobs.

These jobs, to be fair, are why governments work so tirelessly at attracting companies like Starbucks. And when a company that size moves its European and African headquarters here, that is guaranteed to provide jobs. In this case, according to Richard Murphy and not disputed, the number of jobs provided will be between eight, or at the upper end if things get really hectic, 10. That is to say the ringing endorsement, paid for by abolishing a whole layer of tax is between eight and arseing 10.

The cost in lost tax for these eight to 10 jobs must be millions. It would be cheaper to provide those eight to 10 people with work by declaring they were a second royal family and buying each of them a castle. At least they’d all need valets which would create another eight to 10 jobs on top.

The tax changes and regulations that led to this situation may seem complicated, which is why we should be grateful to those like Colin Stanbridge, the Chamber of Commerce executive, for explaining it. After insisting that this would provide much revenue and many jobs, Richard Murphy outlined the tax level of nothing and the exact number of jobs, to which he replied “Well I’m not an expert on tax like you so I don’t know.”

That’s the sort of ringing endorsement London needs, and the attention to detail that ensures we will compete vigorously for the chance to win the competition, for which the prize is nothing.

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