Tax havens are essential and do us all a favour

If companies like Starbucks do not pay corporation tax here, then they are gaining an unfair advantage over those companies that are too small to take advantage of the fiscal manoeuvrings required to avoid such tax. Starbucks etc are taking advantage of our police for protection, our schools for the education of their staff, our roads for the transport of their materials, etc. etc without making the contributions required to support these facilities. If they pay below-living wages to their staff, then they are receiving a subsidy from the rest of us for the support these people require to live.

@Bob I accept that which is why I mentioned that transfer prices must be appropriate (and they are required to be by law). But Starbucks should only pay corporation tax here if it earns profits here. As it happens, the company itself reckons it pays about 35% corporation tax on all its profits in the EU subsidiaries (which is a surprisingly high figure if it is true). The living wage issue is somewhat different.

The comments by 'ShadowMatt' on Starbuck's blog are appropriate: http://starbucks.co.uk/blog/starbucks-commitment-to-the-uk/1240 Additionally, it is my understanding that tax havens, through their culture of secrecy, enable the laundering of the proceeds of drug-related and other crime, and allow the kleptocrats of developing countries to hide money stolen from their people. Does IEA support this?

@Bob. This is a complaint often made but it is one difficult to level at the Netherlands or Ireland and, indeed, given their income level tax havens normally have much better governance than non-tax-haven countries otherwise they could not thrive as financial centres. I think that Shadowmatts comments are somewhat silly. Businesses pay business rates precisely for things such as fire/police etc and it is well documented that businesses way over-pay for these things. The facts in relation to how they relate to my article are this. Corporation tax is a tax on profits. Starbucks pays corporation tax where it makes its profits. If the profits are under-stated in one country and over-stated in another this is a matter of perfectly legitimate dispute. If companies do not make profits, they do not pay tax. UK shareholders will, of course, pay tax on dividends remitted (with very little credit most likely for corporation tax paid elsewhere).