Starbucks cuts staff benefits to fund avoided tax!

The Law of Unintended Consequences strikes again!

From the Guardian   - http://www.guardian.co.uk/business/2012/dec/03/starbucks-slash-lunch-breaks

"Starbucks is cutting paid lunch breaks, sick leave and maternity benefits for thousands of British workers, sparking fresh anger over its business practices.

On the day the House of Commons' public accounts committee branded the US coffee chain's tax avoidance practices "immoral", baristas arriving for work were told to sign revised employment terms, which include the removal of paid 30-minute lunch breaks and paid sick leave for the first day of illness. Some will also see pay increases frozen.

The changes affecting about 7,000 coffee shop staff emerged as thecompany tried to quell public and political outrage at its use of secretive company structures that has seen it pay just £8.6m in UK tax over the past 13 years on sales of £3.1bn.

On Saturday Starbucks announced it would open talks with the UK government that could lead to it paying more tax in future and on Monday it was reported that such an announcement could come on Wednesday. But at the same time it was telling workers it was removing benefits and changing employment arrangements.

The new contractual terms being circulated to staff across 750 stores include the removal of cash incentives for becoming manager or partner of the year in favour of the award of a plaque and the removal of a bonus scheme for women returning after they have had a baby because "it is not considered a valued benefit".

A worker who claimed he was told to sign the new contract last week or leave, told the Guardian colleagues were "really upset" at the changes and said it appeared relatively low-paid staff were being forced to help bear the cost of the company's potentially increased tax bill.

"It's really convenient for them to say we're going to pay more taxes, when they're going to save money with us, the staff," said the coffee shop worker on condition of anonymity. "It's convenient saying we'll pay more because they're going to save more – and the perfect excuse for them is to say to staff 'We're going to pay more taxes, so…'."

He said his manager explained Starbucks "is losing a lot of money in Europe, so they said they needed to make these changes to save the company money".

Even apparently minor benefits are being cut. Starbucks is ending the practice of giving hampers to new mothers in favour of "a card and Starbucks baby grow and bib". The new policy on staff birthdays orders: "Removal of birthday cards. Bakery good code to be issued in store for free birthday treat." Congratulations cards on the anniversary of the first four years of service are being withdrawn."

Britain's millionaire tax backfires

From - The Telegraph - http://www.telegraph.co.uk/news/politics/9707029/Two-thirds-of-millionaires-left-Britain-to-avoid-50p-tax-rate.html

"Two-thirds of millionaires left Britain to avoid 50p tax rate

Almost two-thirds of the country’s million-pound earners disappeared from Britain after the introduction of the 50p top rate of tax, figures have disclosed.

George Osborne, the Chancellor, announced in the Budget earlier this year that the 50p top rate will be reduced to 45p from next April.  Photo: Getty

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In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs.

This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election.

The figures have been seized upon by the Conservatives to claim that increasing the highest rate of tax actually led to a loss in revenues for the Government.

It is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes.

George Osborne, the Chancellor, announced in the Budget earlier this year that the 50p top rate will be reduced to 45p from next April.

Since the announcement, the number of people declaring annual incomes of more than £1 million has risen to 10,000.

However, the number of million-pound earners is still far below the level recorded even at the height of the recession and financial crisis.

Last night, Harriet Baldwin, the Conservative MP who uncovered the latest figures, said: “Labour’s ideological tax hike led to a tax cull of millionaires.

Far from raising funds, it actually cost the UK £7 billion in lost tax revenue."

Special tax incentives lead to tax 'avoidance'

A recent hot issue in the UK is that of tax avoidance (which I am informed is legal and different from tax evasion which is not) practised by practically anyone with a reasonable income - http://www.thetimes.co.uk/tto/money/tax/article3453189.ece - an article in London Times lists " From dentists to doctors and financiers to footballers, through lawyers, dressmakers and an award-winning baker: investors in tax-efficient schemes read like an A to Z of working Britain."

The reason most of these tax avoidance schemes work is because of complex tax legislation that from time to time favours investments in one activity or another.  Over the years these range from encouraging investments in forests (green!) to films and music (culture and arts?) and so forth.

These schemes seem worthwhile and important at the time, but the legislators obviously know little about the Law Of Unintended Consequences.