The Bishop of St Albans, the Rt Revd Dr Alan Smith, has asked some sharp moral and practical questions as issues of international tax come to the fore following the Prime Minister?s announcement on Saturday that the G8 will address tax issues. He made his comments in an address to the Diocesan Synod, the elected governing body of the Diocese of St Albans.
??The Bishop addresses issues about the morality of how markets operate as well as practical questions about the explanations offered by companies such as Starbucks about the small amounts of UK corporation tax they pay.
??Remarking that Starbucks claims to be a loss-making business, he says that the company?s decision to open 200 more shops in the UK ?seems a strange decision for a loss-making business.?
??Addressing the wider issues, the Bishop observes, ?Some multinational companies (correctly) argue that the law allows them to move money from country to country to minimise their tax. They make the distinction between tax evasion (which is illegal) and tax avoidance (which is not). This is extremely complex because multinational corporations by their very nature operate under many different legal and fiscal systems. No one, I think, has argued that these companies are breaking the law. What is up for debate is the moral basis of these laws and whether they are fit for purpose today in the global market.?
? ??What we cannot do is to kid ourselves that either the markets or the law are based on a set of morally neutral assumptions which are valueless free. They inherently embody a range of values and are the product of a long and complex history which has resulted in what we have today. Both law and the markets are social constructs which have changed over time and which will change again in the future. If societies have the will they can change the law and the assumptions on which the market operates.?
?? Moving to more practical issues he turns to Starbucks:
?? ?The company had paid no corporation tax since 2009 and argued that this was because they were losing money in the UK. Yet it turns out that the section of the firm based in Switzerland which provides the coffee adds a 20% premium to the beans it provides for its UK shops. Another section of the firm which is based in the Netherlands charges Starbucks UK for using the brand name.[source:http://www.bbc.co.uk/news/magazine-20560359] All perfectly legal ? but is it moral? Are Starbucks really so magnanimous that they continue to subsidise all their UK shops from their international business because they love to provide the British with coffee? If they are really incapable of earning profits in the UK why don?t they withdraw and leave it to their competitors who are clearly more successful? Furthermore if they are losing money in the UK why did they reward the UK boss by promoting him to a more senior post in America?[source: http://www.publications.parliament.uk/pa/cm201213/cmselect/cmpubacc/716/121112.htm]
??Yet strangely as recently as the end of 2011 Starbucks announced that they were going to open 200 more shops in the UK, which seems a strange decision for a loss making business.?
??The Bishop supports a move to greater financial transparency and commends Christian Aid?s Tax Justice campaign, seeking this end for some time in these words: “It is also because (as Christian Aid has pointed out) poorer countries could be deprived by as much as US$160 billion through tax ?dodges?. If something could be sorted out that was fairer, there would be little need for any Western countries to give Aid to the developing world.”
??The full text of the Bishop’s address can be seen at: https://www.stalbans.anglican.org/wp-content/uploads/downloads/thediocese/Sermons%20and%20speeches/BStAjune2013presidentialaddress.pdf