Tax Dodging Companies & Conscientious Consumers

by Paul Simister on November 24, 2012

With many Western governments running large and unaffordable annual public spending deficits (despite claims of austerity) attention has turned to giant companies who use aggressive tax saving schemes.

This includes companies like Google,  Facebook,  Amazon and Starbucks which make high sales in the UK but pay little corporation tax.

They do this by switching revenue out of the UK subsidiaries and switching costs in through loopholes in the tax regulations.

Whether this is appropriate behaviour depends on your perspective.

Governments will see it as bad as they are losing tax but it’s their tax laws that are allowing it to happen.

Company shareholders (direct or indirect through pension schemes) should see it as admirable.  The more money the company keeps, the more valuable the shares.

Companies can point to the value they create for the economy through employment tax, property rates and VAT.

Consumers may be indifferent but it is the body of individual consumers who have the power to make companies do the “right thing”.

Whilst differentiation is usually about creating a positive preference for one particular brand,  negative differentiation can create a preference for anything except that brand.

When I was a student,  there was a boycott against Barclays Bank because of their involvement in apartheid South Africa.

These tax dodging companies risk social outrage creating similar boycotts.

Paul Simister is a business strategy coach who helps business owners to differentiate their businesses and develop winning strategies. Get your free copy of The Six Steps Profit Formula.

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{ 1 comment… read it below or add one }

Paul December 2, 2012 at 8:42 am

The Sunday Times reported on 2 December 2012 that Starbucks is expected to announce that it will reduce the 4.7% of turnover royalty fee for the right to use the brand name that transfers profit to another company based in Holland.


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