They have another option though, instead of just trying to price themselves competitively they can change the rules and enforce better.
A government doesn't have to compete like this if it holds the key to its market. If the rules are changed adequately you absolutely can say that they must pay to play, and pay what you ask.
A mail-order company like Amazon is a different beast in this respect, but something like Starbucks which has hundreds or thousands of physical locations can't just set up somewhere else if you set the rules right.
It sounds like you're saying that now that Starbucks has an entire infrastructure in the UK and therefore can't just set up somewhere else, you've got them by the short and curlies, so you can change the laws any which way you want to extract as much tax from them as you please.
Starbucks followed the law. You may not agree with the way they did it, or what the law says, but AFAICT nobody is arguing that they've done anything wrong (in the legal sense) right now.
The avoided taxes are corporate. All the VAT, taxes related to the jobs they've created (which are legion, as you yourself have admitted), local taxes (I am unfamiliar with how these work in the UK, but I presume they exist)... are still being paid. Starbucks is significantly improving the state of the coffers, and it's also minimizing how much it does so, as is its right and responsibility.
<i>The avoided taxes are corporate. All the VAT, taxes related to the jobs they've created (which are legion, as you yourself have admitted), local taxes (I am unfamiliar with how these work in the UK, but I presume they exist)... are still being paid.</i>
Amazon "sells" all the e-goods they can from a notional location in Luxembourg so that they can charge a 3% VAT rate on them. Small physical goods are / were shipped out of Jersey (although how many of them actually came from Jersey and how many were notionally shipped there and back again? Your guess is as good as mine...and I wouldn't put it past Amazon to push that little loophole as far as they possibly could) so that they incurred no VAT at all, until the government finally clamped down on that little scheme.
Trust me, if they can avoid the VAT, they will do so, and pocket the difference at the expense of local suppliers who can't afford the economies of scale that would permit them to set up these schemes.
And if you really think Starbucks artificially moving profits around by charging more than the market rate for coffee beans from it's own traders in a low-tax country is legal, I have a bridge to sell you. Unfortunately, the Inland Revenue just doesn't have the manpower to clamp down on the proliferation of ways in which companies can play these kind of "Hollywood Accounting" games, which is why some kind of alternate-minimum-tax approach is the only workable solution IMO. (Assuming you believe in corporation taxes in the first place of course, which is a whole separate kettle of fish!)
No, I'm saying that Starbucks operate coffee houses in the UK, as such they are operating a business within UK borders. Regardless of some status as a homeless multinational they are operating a coffee shop business within the UK.
It makes no sense to me that a local or national chain should be at a disadvantage because they pay corporation tax in the UK, when a multinational can essentially run the same business but spirit away the profits when tax-time comes around.
That's what I mean by the government holding the keys to the market, it should be possible to say that if you want to operate here and have access to our (clearly lucrative) market then you run by the same rules as everyone else, giving an honest account of the profit and loss made on the business in this country.
"The avoided taxes are corporate."
So? The corporation is operating a business in the UK.
VAT is a tax on the purchaser, not the company.
PAYE is a tax on the employee, not the company.
Yes, they pay 'business rates'. As they are required to.
And no, I'm not suggesting what the are doing is illegal, I'm suggesting it should be made so.
The benefits of Starbucks operating the UK without paying corporation tax is debatable. Is it really improving the coffers if people would go for coffee anyway, in a place that does contribute back to the society it's operating in?
I agree ... And my original post states the laws should be changed. But why not change them in a way that maximizes the tax income and makes the country more favorable to corporations?
I don't think it's a bad idea in isolation, I'm just not sure it's a solution to the current problem. The race to the bottom that struck me is competing on being the place where the magic profit fairy makes her appearance.
I think both solutions would probably be great - fix the glaring problem that multinationals can avoid corporation tax though legislation (where local and national firms can't), AND then try to maximise take (and employment and all those other good things) by adjusting tax levels.
Sound good?
--edit-- if his is broadly in line with what you were saying from the word go then sorry for being an argumentative arse. Need more sleep...
A government doesn't have to compete like this if it holds the key to its market. If the rules are changed adequately you absolutely can say that they must pay to play, and pay what you ask.
A mail-order company like Amazon is a different beast in this respect, but something like Starbucks which has hundreds or thousands of physical locations can't just set up somewhere else if you set the rules right.