Why Starbucks* Isn’t Paying Tax
I’m posting this in response to some great Twitter conversations about large corporations and tax avoidance. Specifically, why large corporations seek to shun this social responsibility.
The below is a modified section of the speech I gave at the MDG Summit earlier this year.
Once upon a time private businesses were created in the image of their founders and took a fairly paternalistic attitude towards their employees – understanding, as they did, the value of a healthy and stable workforce. This was an expense well worth its return at a time where employment was usually a life-long commitment.
Of course, as industries expanded and became more competitive not all companies offered the same commitments to their staff creating something of a lottery. Unequal provision of education and healthcare combined with increasing mobility (decreased retention) of staff fuelled the notion that improvements in social conditions were a responsibility the government should meet for all it’s citizens equally.
As the state assumed greater responsibility for employees and their families, businesses enshrined their belief that the burden of welfare and social responsibility had been “outsourced” to the state to whom it paid taxes.
Over time this created the situation we see now; where providing financial return to shareholders is the sole (or at least primary) responsibility of business. In turn, this informs funds and businessmen for whom the perception has developed that it is at best irresponsible, and at worst illegal, for those operating capital to invest it for anything other than maximum financial return, regardless of the social and environmental consequences of doing so.
These cultural shifts polarised capital to the situation we see now, where it will either be invested to extract financial returns (as in business) spent to achieve a social outcome (as in government) or donated to help those the system has failed (charity)
Social enterprise seeks to turn back the clock in developed nations and chart a new course for developing nations, reuniting business with its societal responsibilities …”
From this situation it is a small, Milgram-esque step for individuals within corporations to feel pressured to ‘forget’ that these burdens were effectively outsourced (not removed) and begin to seek to maximise shareholder value to the exclusion of paying morally due taxes, only heeding those that are legally due.
This is also why I believe legislation is the only tool by which we effectively bring capitalism back in line.
*and Amazon, and Topshop, and Vodaphone..