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Taxes Are the New Sex as Campaigns Target Multinationals

LONDON - An attempt by Starbucks to buy its way out of a consumer boycott with a voluntary payoff to the British taxman may have backfired.

The Seattle-based global coffee chain has offered to pay the British government £20 million, or $32 million, over the next two years after it emerged that the company had paid only £8.6 million since 1998 on sales of £3 billion in Britain.

But politicians, newspapers and coffee-drinkers called the offer a public relations stunt that made a joke of the tax system.

Richard Murphy, a British accountant, posted:

And the satirical News Thump joked:

A tax pressure group said it planned to go ahead with sit-ins at 40 of the company's stores this weekend.

With Britain and other European states in the grip of an austerity regime stemming from the debt crisis, taxes are replacing sex as the daily staple of the popular press amid a backlash against corporations and indiv iduals accused of not paying their fair share.

Rendezvous reported on Wednesday on international moves to squeeze the owners of bank accounts in Switzerland who are accused of using the country's banking secrecy laws to squirrel away fortunes in unpaid taxes.

Across Europe, governments have launched a crackdown on Internet giants, including Google and Amazon, by moving to close loopholes that allow them to pay minimal tax on their operations in the Continent.

No one is accusing the multinationals of breaking the law. The accusation is that they are taking advantage of clever tax avoidance methods to minimize their contributions to European treasuries.

The Associated Press wrote this week: “Thanks to the way the European Union is run, companies operating in Europe can base themselves in any of the 27 member countries, allowing them to take advantage of a particular country's low tax rates.”

Business lobbyists have argued that a populist campaign against alleged multinational tax avoiders is anti-business. Others have argued that the way forward is for politicians to reform tax law at the European level.

Kris Engskov, who heads Starbuck's British unit, acknowledged on Thursday that “tax has become an important subject of debate over the past several weeks and I think it's important to share that the emotion of the issue has taken us a bit by surprise.”

He said the company would pay around £10 million annually in tax over the next two years, whether its British operation, which includes 760 retail stores, was profitable or not.

Executives of Starbucks, Google and Amazon last month faced a fierce grilling on taxes by British legislators. After the session of Parliament's Public Accounts Committee, one observer wrote: “By the end, Starbucks management had been plucked, roasted, ground and sprayed with hot steam.”

The committee this week accused the companies of “immorally” avoiding paying their fair share of taxes.

Margaret Hodge, the opposition Labour Party politician who chairs the committee, said, “Global companies with huge operations in the U.K. generating significant amounts of income are getting away with paying little or no corporation tax here.”

< p>As the tax issue became the favorite talking point among customers and baristas, Starbucks opted to offer its voluntary payment under threat of a consumer boycott.

Political reaction was cautious at best. Ms. Hodge said it was a “first step in the right direction” and she hoped Google and Amazon would follow suit.

Stephen Williams, Treasury spokesman for the Liberal Democrats, part of the coalition running the government, was quoted saying, “It is extraordinary. People have been joking that some of these multinationals seem to think that paying tax is voluntary. Well, Starbucks have just confirmed the joke really.”

Prem Sikka, a professor of accountancy at Essex University, was among those who rejected the concept of a “private sweetheart deal” with the taxman, telling the BBC: “We need to get Starbucks to p ay proper tax.”

The company's £20 million offer put it on a potential collision course with investors, according to the Financial Times, since the payment would come from its parent group.

“Its plan is yet to be accepted by the U.K. tax authorities, which were not consulted in advance,” the business daily reported, “and it sends a troubling signal to other companies under attack over their U.K. taxes, including Amazon and Google.”