Campaigners “protesting against the Autumn Statement” have taken part in marches in Manchester and Liverpool.
Demonstrations were held in both cities by protest groups, including UK Uncut and Boycott Workfare, and trade unions.
Manchester organiser Mark Krantz said the “poorest will be going without” as a result of the Chancellor’s statement on Wednesday.
Prime Minister David Cameron has said the Chancellor’s plans would be “hugely helpful for working people”.
Mr Krantz, of Manchester Coalition Against Cuts, said the plans meant working people “face further cuts to their household budgets as pay and benefits have been set at below inflation levels”.
“Claims that ‘we now really are all in it together’ are clearly not true – rich people will not go hungry this Christmas, but the poorest will be going without,” he said.
“Council budgets for cities like Manchester and Liverpool, which have already suffered with jobs slashed and vital services shut, are now facing further cuts due to Osborne’s announcements.”
Michelle Smith, of Liverpool Against the Cuts, said the plans would “hit the most vulnerable in our society”.
She added that the Liverpool protest would be “highlighting the effect of the cuts on women in particular” and that all the groups involved were “protesting against the Chancellor’s Autumn Statement”.
Chancellor George Osborne delivered the coalition government’s plans for taxing and spending in his annual Autumn Statement on Wednesday.
The statement laid out changes to welfare and tax and cuts to local government budgets amongst other measures.
CAIRO (Reuters) – Tens of thousands of Egyptian protesters surged around the presidential palace on Friday and the opposition rejected President Mohamed Mursi‘s call for dialogue to end a crisis that has polarized the nation and sparked deadly clashes.
The Islamist leader’s deputy said he could delay a December 15 referendum on a constitution that liberals opposed, although the concession only partly meets a list of opposition demands that include scrapping a decree that expanded Mursi‘s powers.
“The people want the downfall of the regime” and “Leave, leave,” crowds chanted after bursting through barbed wire barricades and climbing on tanks guarding the palace of Egypt‘s first freely elected president.
Their slogans echoed those used in a popular revolt that toppled Mursi’s predecessor Hosni Mubarak in February 2011.
Vice President Mahmoud Mekky said in a statement sent to local media that the president was prepared to postpone the referendum if that could be done without legal challenge.
The dialogue meeting was expected to go ahead on Saturday in the absence of most opposition factions. “Tomorrow everything will be on the table,” a presidential source said of the talks.
The opposition has demanded that Mursi rescind a November 22 decree giving himself wide powers and delay the vote set for December 15 on a constitution drafted by an Islamist-led assembly which they say fails to meet the aspirations of all Egyptians.
The state news agency reported that the election committee had postponed the start of voting for Egyptians abroad until Wednesday, instead of Saturday as planned. It did not say whether this would affect the timing of voting in Egypt.
Ahmed Said, leader of the liberal Free Egyptians Party, told Reuters that delaying expatriate voting was made to seem like a concession but would not change the opposition’s stance.
He said the core opposition demand was to freeze Mursi’s decree and “to reconsider the formation and structure of the constituent assembly”, not simply to postpone the referendum.
The opposition organized marches converging on the palace which elite Republican Guard units had ringed with tanks and barbed wire on Thursday after violence between supporters and opponents of Mursi killed seven people and wounded 350.
Islamists, who had obeyed a military order for demonstrators to leave the palace environs, held funerals on Friday at Cairo’s al-Azhar mosque for six Mursi partisans who were among the dead. “With our blood and souls, we sacrifice to Islam,” they chanted.
“ARM-TWISTING”
In a speech late on Thursday, Mursi had refused to retract his November 22 decree or cancel the referendum on the constitution, but offered talks on the way forward after the referendum.
The National Salvation Front, the main opposition coalition, said it would not join the dialogue. The Front’s coordinator, Mohamed ElBaradei, a Nobel peace laureate, dismissed the offer as “arm-twisting and imposition of a fait accompli”.
Murad Ali, spokesman of the Brotherhood’s Freedom and Justice Party (FJP), said opposition reactions were sad: “What exit to this crisis do they have other than dialogue?” he asked.
Mursi’s decree giving himself extra powers sparked the worst political crisis since he took office in June and set off renewed unrest that is dimming Egypt’s hopes of stability and economic recovery after nearly two years of turmoil following the overthrow of Mubarak, a military-backed strongman.
The turmoil has exposed contrasting visions for Egypt, one held by Islamists, who were suppressed for decades by the army, and another by their rivals, who fear religious conservatives want to squeeze out other voices and restrict social freedoms.
Caught in the middle are many of Egypt’s 83 million people who are desperate for an end to political turbulence threatening their precarious livelihoods in an economy under severe strain.
“We are so tired, by God,” said Mohamed Ali, a laborer. “I did not vote for Mursi nor anyone else. I only care about bringing food to my family, but I haven’t had work for a week.”
ECONOMIC PAIN
A long political standoff will make it harder for Mursi’s government to tackle the crushing budget deficit and stave off a balance of payments crisis. Austerity measures, especially cuts in costly fuel subsidies, seem inevitable to meet the terms of a $ 4.8-billion IMF loan that Egypt hopes to clinch this month.
U.S. President Barack Obama told Mursi on Thursday of his “deep concern” about casualties in this week’s clashes and said “dialogue should occur without preconditions”.
The upheaval in the most populous Arab nation worries the United States, which has given billions of dollars in military and other aid since Egypt made peace with Israel in 1979.
The conflict between Islamists and opponents who each believe the other is twisting the democratic rules to thwart them has poisoned the political atmosphere in Egypt.
The Muslim Brotherhood’s spokesman, Mahmoud Ghozlan, told Reuters that if the opposition shunned the dialogue “it shows that their intention is to remove Mursi from the presidency and not to cancel the decree or the constitution as they claim”.
Ayman Mohamed, 29, a protester at the palace, said Mursi should scrap the draft constitution and heed popular demands.
“He is the president of the republic. He can’t just work for the Muslim Brotherhood,” Mohamed said of the eight-decade-old Islamist movement that propelled Mursi from obscurity to power.
(Additional reporting by Omar Fahmy; Writing by Edmund Blair and Alistair Lyon; Editing by Giles Elgood)
CANBERRA (Reuters) – According to Australian Prime Minister Julia Gillard, the Mayans were right and the apocalypse is near.
In a spoof 50-second video appearance promoting a local radio station‘s breakfast show, Gillard provided hair-raising details that she said would come when the world ends this month, as the ancient Mayans calendar predicted.
With the straight face she often uses in a normal press conference, and surrounded by Australian national flags, Gillard addressed viewers as “My dear remaining fellow Australians.”
“The end of world is coming. It wasn’t Y2K, it wasn’t even the carbon price,” said Gillard firmly. “It turns out that the Mayan calendar is true.”
Y2K was the computer glitch feared globally just before the year 2000, while the carbon tax refers to a major controversial policy put forward by her Labour government in 2012.
She went into terrifying details about the end of the world such as “flesh-eating zombies” and “demonic hell beasts”, but then wooed her constituents with promises.
“If you know one thing about me it is this: I will always fight for you to the very end,” she said, but noted that there is also a bright spot.
“At least this means I won’t have to do Q&A again,” she said, referring to an Australian TV show where politicians usually have to face tough questions from the audience.
A spokesman for Gillard said the video, which was uploaded by radio station Triple J on Thursday and has already been viewed more than 232,000 times on YouTube, was simply a spoof.
“It’s just bit of fun,” he told Reuters. “It’s just a bit of humor for the end of the year. Nothing else.”
The video comes out in the wake of a phone hoax in which two Australian presenters from another local radio station called the hospital which is treating Prince William’s wife Kate and posed as Queen Elizabeth and Prince Charles to ask questions about her condition.
(Reporting By Maggie Lu Yueyang, editing by Elaine Lies)
WASHINGTON (AP) — Americans are living longer, and Republicans want to raise the Medicare eligibility age as part of any deal to reduce the government’s huge deficits.
But what sounds like a prudent sacrifice for an aging society that must watch its budget could have some surprising consequences, including higher premiums for people on Medicare.
Unlike tax hikes, which spawn hard partisan divisions, increasing the Medicare age could help ease a budget compromise because President Barack Obama has previously been willing to consider it. A worried AARP, the seniors’ lobby, is already running ads knocking down the idea as a quick fix that would cause long-term problems. House Democratic Leader Nancy Pelosi, D-Calif., doesn’t like it either.
But for Republicans seeking more than just tweaks to benefit programs, raising the current eligibility age of 65 has become a top priority, a symbol of their drive to rein in government. If Obama and the GOP can’t agree soon on a budget outline, it may trigger tax increases and spending cuts that would threaten a fragile economic recovery.
Increasing the eligibility age to 67 would reduce Medicare spending by about 5 percent annually, compounding into hundreds of billions of dollars over time. But things aren’t that simple.
“This is a policy change that seems straightforward, but has surprising ripple effects,” said Tricia Neuman, a leading Medicare expert with the nonpartisan Kaiser Family Foundation. “It’s a simple thing to describe, and the justification is that people are living longer, but I don’t think people have thought through the indirect effects.”
Among the cost shifts identified in a Kaiser study:
—Higher monthly premiums for seniors on Medicare. Their costs would go up because keeping younger, healthier 65- and 66-year-olds out of Medicare’s insurance pool would raise costs for the rest. The increase would be about 3 percent when the higher eligibility age is fully phased in.
—Higher premiums for private coverage under Obama’s health overhaul. That’s because older adults would stick with private insurance for two extra years before moving into Medicare. Compared with younger adults, they are more expensive to insure.
—An increase in employer costs because older workers would try to stay on company insurance plans.
—Higher out-of-pocket health care costs for two out of three older adults whose entry into Medicare would be delayed.
The Congressional Budget Office has also projected an increase in the number of uninsured. That possibility becomes more real with populous states like Texas saying they won’t accept the Medicaid expansion in Obama’s health overhaul, which would provide coverage to low-income adults. Then there’s the impact on people with physically demanding jobs, for whom extending their working years may be difficult.
Still, the idea isn’t going away.
Polls show that many Americans are willing to consider raising the age at which people become eligible for Medicare benefits as part of a plan to reduce deficits, even if on the whole it’s still unpopular.
A new Associated Press-GfK poll found that four in 10 back gradually raising the eligibility age, while 48 percent oppose that plan.
Those under age 30 were most supportive, while a clear majority of those between the ages of 30 and 64 were opposed. Seniors were split. Surprisingly, there were no significant differences by political party. Overall, foes of the idea were more adamant, with strong opponents outnumbering strong supporters by 2-1.
U.S. life expectancy has risen by about eight years since Medicare was created in 1965. During the 1980s, Republican President Ronald Reagan and Democratic congressional leaders agreed to gradually increase the age for receiving full Social Security benefits from 65 to 67. But they didn’t touch Medicare eligibility.
Since then, some policy experts have advocated aligning the Medicare and Social Security eligibility ages through a gradual phase-in that would spare those close to retirement.
The idea gained new life when Republicans won the House in 2010, and Budget Chairman Paul Ryan, R-Wis., embraced it. Obama indicated he was open to it during budget talks with Republicans in 2011. But the president quickly retreated, and now says he’s not willing to consider cutting Medicare unless Congress agrees to raise taxes on the wealthy.
The No. 2 Democrat in the House, Maryland Rep. Steny Hoyer, says raising the eligibility age and other cuts “clearly are on the table,” although he doesn’t see much chance for them if Republicans don’t yield on taxes.
For his part, House Speaker John Boehner, R-Ohio, has relented from pursuing other major changes to Medicare, such as privatization. But when it comes to the eligibility age, he is still pushing.
“It’s a structural change but it doesn’t require you to adopt a whole new model,” said Scott Gottlieb, a health policy expert with the business-oriented American Enterprise Institute. “It can be enacted quickly so you get the savings, and it can be phased in so you don’t affect people about to retire.”
AARP and other groups representing older adults are mobilizing against it.
“We are prepared to oppose this one pretty strongly,” said AARP legislative policy director David Certner. “It’s a pretty big deal.”
Raising the eligibility age is not the only Medicare cut in play. Hospitals and other service providers could see reductions in payments, drug companies may owe new rebates to the government and upper-income seniors would face higher monthly premiums. The total package could reach around $ 400 billion over 10 years.
NEW YORK (Reuters) – Investors typically sell stocks to cut their losses at year end. But worries about the “fiscal cliff” – and the possibility of higher taxes in 2013 – may act as the greatest incentive to sell both winners and losers by December 31.
The $ 600 billion of automatic tax increases and spending cuts scheduled for the beginning of next year includes higher rates for capital gains, making tax-loss selling even more appealing than usual.
Tax-related selling may be behind the weaker trend in the shares of market leader Apple , analysts said. The stock is down 20 percent for the quarter, but it’s still up nearly 32 percent for the year.
Apple dropped 8.9 percent in this past week alone. For a stock that gained more than 25 percent a year for four consecutive years, the embedded capital gains suddenly look like a selling opportunity if one’s tax bill is going to jump sharply just because the calendar changes.
“Tax-loss selling is always a factor (but) tax-gains selling has been a factor this year,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
“You have a lot of high-net-worth individuals in taxable accounts, and that could be what’s affecting stocks like Apple. If you look at the stocks that people have their largest gains in, they seem to be under a little bit more pressure here than usual.”
Of this year’s top 20 performers in the S&P 1500 index, which includes large, small and mid-cap stocks, all but four have lost ground in the last five trading sessions.
The rush to avoid higher taxes on portfolio gains could cause additional weakness.
The S&P 500 ended the week up just 0.1 percent after another week of trading largely tied to fiscal cliff negotiation news, which has pushed the market in both directions.
A PAIN PILL FROM THE FED?
Next week’s Federal Reserve meeting could offer some relief if policymakers announce further plans to help the lackluster U.S. economy. The Federal Open Market Committee will meet on Tuesday and Wednesday. The policy statement is expected at about 12:30 p.m. on Wednesday after the conclusion of the meeting – the Fed’s last one for the year.
Friday’s jobs report showing non-farm payrolls added 146,000 jobs in November eased worries that Superstorm Sandy had hit the labor market hard.
“After the FOMC meeting, I think it’s going to be downhill from there as worries about the fiscal cliff really take center stage and prospects of a deal become less and less likely,” said Mohannad Aama, managing director of Beam Capital Management LLC in New York.
“I think we are likely to see an escalation in profit-taking ahead of tax rates going up next year,” he said.
MORE VOLUME AND VOLATILITY
Volume could increase as investors try to shift positions before year end, some analysts said.
While most of that would be in stocks, some of the extra trading volume could spill over into options, said J.J. Kinahan, TD Ameritrade’s chief derivatives strategist.
Volatility could pick up as well, and some of that is already being seen in Apple’s stock.
“The actual volatility in Apple has been very high while the market itself has been calm. I expect Apple’s volatility to carry over into the market volatility,” said Enis Taner, global macro editor at RiskReversal.com, an options trading firm in New York.
Shares of Apple, the largest U.S. company by market value, registered their worst week since May 2010. In another bearish sign, the stock’s 50-day moving average fell to $ 599.52 – below its 200-day moving average at $ 601.38.
“There’s a lot of tax-related selling happening now, and it will continue to happen. Apple is an example, even (though) there are other factors involved with Apple,” Aama said.
While investors may be selling stocks to avoid higher taxes in 2013, companies may continue to announce special and accelerated dividend payments before year end. Among the latest, Expedia announced a special dividend of 52 cents a share to be paid on December 28.
To be sure, the big sell-off in stocks following the November 6 election was likely related to tax selling, making it hard to judge how much more is to come.
Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston, said there’s a decent chance that the market could rally before year end.
“Even with little or spotty news that one would put in the positive bucket regarding the (cliff) negotiations, the market has basically hung in there, and I think it’s hung in there in anticipation of something coming,” he said.
(Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: caroline.valetkevitch(at)thomsonreuters.com)
(Reporting by Caroline Valetkevitch; Editing by Jan Paschal; Multimedia versions of Reuters Top News are now available for:; 3000 Xtra: visit Reuters Top News; BridgeStation: view story .134; For London stock market outlook please click on .L/O; Pan-European stock market outlook .EU/O; Tokyo stock market outlook .T/O; Wall St Week Ahead runs every Friday.)
TORONTO (Reuters) – Toronto Mayor Rob Ford can stay in power pending an appeal of a conflict of interest ruling that ordered him out of his job as leader of Canada’s biggest city, a court ruled on Wednesday.
Madam Justice Gladys Pardu of the Ontario Divisional Court suspended a previous court ruling that said Ford should be ousted. Ford’s appeal of that ruling is set to be heard on January 7, but a decision on the appeal could take months.
Justice Pardu stressed that if she had not suspended the ruling, Ford would have been out of office by next week. “Significant uncertainty would result and needless expenses may be incurred if a by-election is called,” she said.
If Ford wins his appeal, he will get to keep his job until his term ends at the end of 2014. If he loses, the city council will either appoint a successor or call a special election, in which Ford is likely to run again.
“I can’t wait for the appeal, and I’m going to carry on doing what the people elected me to do,” Ford told reporters at City Hall following the decision.
Ford, a larger-than-life character who took power on a promise to “stop the gravy train” at City Hall, has argued that he did nothing wrong when he voted to overturn an order that he repay money that lobbyists had given to a charity he runs.
Superior Court Justice Charles Hackland disagreed, ruling last week that Ford acted with “willful blindness” in the case, and must leave office by December 10.
Ford was elected mayor in a landslide in 2010, but slashing costs without cutting services proved harder than he expected, and his popularity has fallen steeply.
He grabbed unwelcome headlines for reading while driving on a city expressway, for calling the police when a comedian tried to film part of a popular TV show outside his home, and after reports that city resources were used to help administer the high-school football team he coaches.
The conflict-of-interest drama began in 2010 when Ford, then a city councillor, used government letterhead to solicit donations for the football charity created in his name for underprivileged children.
Toronto’s integrity commissioner ordered Ford to repay the C$ 3,150 ($ 3,173) the charity received from lobbyists and companies that do business with the city.
Ford refused to repay the money, and in February 2012 he took part in a city council debate on the matter and then voted to remove the sanctions against him – despite being warned by the council speaker that voting would break the rules.
He pleaded not guilty in September, stating that he believed there was no conflict of interest as there was no financial benefit for the city. The judge dismissed that argument.
In a rare apology after last week’s court ruling, he said the matter began “because I love to help kids play football”.
Ford faces separate charges in a C$ 6 million libel case about remarks he made about corruption at City Hall, and is being audited for his campaign finances. The penalty in the audit case could also include removal from office.
(Reporting by Claire Sibonney; Editing by Janet Guttsman, Russ Blinch, Nick Zieminski; and Peter Galloway)
(Reuters) – Digital music service Spotify rolled out new features and said it increased the number of active users at a press event that featured a special musical performance by Frank Ocean.
Spotify now has 20 million active users worldwide, up 33 percent in less than six months. The company counts five million people among paying subscribers, a 25 percent increase during the same time period.
Spotify also revealed it has one million paid subscribers in the United States, that it added a Twitter like functionality that allows users to follow one another, and that the rock band Metallica‘s music was now available on the service.
The company made the announcements at a splashy New York event on Thursday that included a conversation between Spotify backer Sean Parker and Metallica drummer Lars Ulrich.
Ulrich’s appearance is notable since his band was one of the leading crusaders against Napster, the digital music sharing company co-founded by Parker more than a decade ago that was a flashpoint for digital rights and artist compensation.
“We have more in common than the whole thing that happened 12 years ago,” said Ulrich about Parker.
Ulrich said the decision to join Spotify coincided with the fact the band now owns its entire catalogs of music.
Spotify, which strikes royalty deals with record labels, has paid more than $ 500 million to the music industry since its launch four years ago – an amount that has more than doubled in the past nine months. It pays roughly 70 percent of its revenue back to rights holders.
“The more music that gets shared the more money goes back to artists,” said Daniel Ek, CEO and co-founder of Spotify.
Spotify is a free on-demand streaming music service that is rising in popularity. People can pay to hear music without interruptions from advertising and the ability to play lists and preferences from any device any time.
The company has struck up a partnership with Facebook – Parker is Facebook’s founding president – that allows listener’s to display their music choices on their personal pages.
Streaming music services such as Spotify and Pandora are being carefully watched by the music industry concerned over the royalty payments.
For example, Pandora is pushing the Internet Radio Fairness Act, which would change how royalties are paid to artists. As of now, online streaming music companies like Pandora pay a different rate to license music than say traditional radio companies.
Many of music’s most notable names like Billy Joel and Rihanna are opposing the proposed change.
(Reuters) – Not only are men more likely than women to be diagnosed with cancer, men who get it have a higher chance of dying from the disease, according to a U.S. study.
In an analysis of cases of all but sex-specific cancers such as prostate and ovarian cancer, for example, men were more likely than women to die in each of the past ten years, said researchers, whose findings appeared in The Journal of Urology.
That translates to an extra 24,130 men dying of cancer in 2012 because of their gender.
“This gap needs to be closed,” said Shahrokh Shariat from Weill Cornell Medical College in New York, who worked on the study. “It’s not about showing that men are only doing worse and, ‘poor men.’ It’s about closing gender differences and improving health care.”
Using U.S. cancer registry data from 2003 through 2012, Shariat and his colleagues found the ratio of deaths to cancer diagnoses decreased 10 percent over the past decade – but was consistently higher among men than women.
Overall, men with any type of cancer were six percent more likely to die of their disease than women with cancer. When men and women with the same type of cancer were compared, that rose to more than 12 percent.
In 2012, Shariat’s team calculated that about 575,130 men and 457,240 women would be diagnosed with a non-sex specific cancer. Also this year, an estimated 243,620 men will die of cancer – one death for every 2.36 new diagnoses, compared to 182,670 women dying, or one for each 2.5 new diagnoses.
“We found that from the 10 most common cancers in males and females… men present at a higher stage than females, and adjusted for the incidence, are more likely to die from the cancer,” Shariat told Reuters Health.
“If you take an average of the 10 most common cancers, men are more likely to die in seven out of the ten,” he added. In contrast, women are more likely to die only from bladder cancer.
The new study can’t show what’s behind the differences in cancer deaths, but possible theories include men’s higher rates of smoking and drinking combined with less frequent doctor’s visits – which cause men’s cancers to be diagnosed in later, more advanced stages.
Sex hormones may also contribute to differences in men’s and women’s immune systems, metabolism and general susceptibility to cancer, according to Yang Yang, a sociologist and cancer researcher from the University of North Carolina at Chapel Hill, who studies health disparities but wasn’t part of the study.
She said the new findings are consistent with work suggesting a higher risk of death for men from many causes, not just cancer.
But a full understanding of the origins and mechanisms in sex differences in cancer, as well as overall mortality, has remained elusive,” Yang told Reuters Health in an email.
Shariat said men should be particularly proactive about their health care.
“That means going to screening programs, seeing a general practitioner or primary care provider on a regular basis and as soon as symptoms arise that are new, mentioning that to their primary care physicians,” he added. SOURCE: http://bit.ly/Vz8RJI
(Reporting from New York by Genevra Pittman at Reuters Health, editing by Elaine Lies)
Starbucks UK’s Kris Engkov: “We are going to do what’s required beyond the law”
Coffee chain Starbucks has agreed to pay more UK corporation tax, after a public outcry over how little it pays.
Kris Engskov, managing director of Starbucks UK, announced that the company would pay “a significant amount of tax during 2013 and 2014, regardless of whether the company is profitable”.
One tax expert described the move as “unprecedented”.
HM Revenue and Customs reacted by saying that corporation tax “is not a voluntary tax”.
“The public expects businesses to pay their fair share,” the tax authorites added, “and HMRC will challenge, through the courts if necessary, any structures or tax payments that do not comply with the UK tax law.”
But Amazon and Google, also under fire for paying little UK tax, held firm.
The extra tax could amount to £20m over the next two years, Mr Engskov said.
Bill Dodwell, head of tax policy at the accountants Deloitte, told the BBC that he suspected the figure was a “sensible number taking account of the scale of the business and their history of past losses”.
“This is an unprecedented move for a company to announce this sort of change,” he said.
‘Joke’
Starbucks’ announcement comes after much public anger over the revelation of how little corporation tax it pays in the UK, with some people saying they would boycott its outlets.
Continue reading the main story
“Start Quote
Offering to pay some tax if and when it suits you doesn’t stop you being a tax dodger”
End QuoteUK Uncut
The company has paid just £8.6m in corporation tax in its 14 years of trading in the UK, and nothing in the last three years, despite UK sales of nearly £400m in 2011.
Starbucks has reported a taxable profit only once in its 15 years of operating in the UK, often reporting losses.
“It is extraordinary,” Stephen Williams, Treasury spokesman for the Liberal Democrats, told the BBC. “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.
“Tax is something that is a legal obligation that you should pay according to the tax rules of a particular country. It’s not a charitable donation in order to gain sort of brand value. But that seems to be what Starbucks are doing.”
Continue reading the main story
“Start Quote
I don’t think there will be many people who stop using Google… but the problem for Starbucks is there is a coffee shop on every High Street”
End QuoteRichard BaconConservative MP
Conservative MP Richard Bacon, who is a member of the Public Accounts Committee, expressed surprise at the move.
“They have recognised the public outrage at the fact that a company as large as Starbucks would… not be paying any corporation tax.
“They have realised that it is a PR problem and it is a PR response. It is nice for the exchequer to have a bit more money, but it is not a long-term solution to the problem that we face.”
Starbucks admitted that the degree of hostility and emotion surrounding the tax issue had “taken us a bit by surprise” and that the move was an attempt to rebuild trust with its customers.
“Since we started doing business here, we have always organised our tax affairs according to the letter of the law,” said Mr Engskov.
“[But] with the backdrop of these difficult times, in the area of tax, our customers clearly expect us to do more,” he said.
Mr Engskov added that the company had found it difficult to make profits in the UK, which has “the most competitive espresso market in the world”, despite “two million customers visiting us each week in hundreds of stores across the UK”.
The extra tax payments will be funded by not claiming “tax deductions for royalties or payments related to our intercompany charges”, Mr Engskov said.
Margaret Hodge, the chair of the Public Accounts Committee, says this is a welcome first step
Mr Dodwell said he thought the coffee chain would not claim some of the deductions they may otherwise have been allowed to claim.
“We don’t know the details – that will be between the company and HM Revenue and Customs,” he said.
More protests
UK Uncut, a group that protests against corporate tax avoidance in the UK, said that Starbucks’ announcement was not enough and that 40 “actions” would take place in Starbucks stores up and down the country.
“There’s no money yet, and hollow promises on press releases don’t fund women’s refuges or child benefits,” the group said. “Offering to pay some tax if and when it suits you doesn’t stop you being a tax dodger. Today’s announcement is just a desperate attempt to deflect public pressure.
“The £10m that Starbucks has estimated it may end up paying is £5m less than that paid by their nearest competitor Costa coffee.”
Starbucks has 760 outlets across the UK and says it contributes “£300m to the UK economy” each year. Rival Costa has 1,479 coffee shops.
In a statement, Amazon said: “Amazon pays all applicable taxes in every jurisdiction that it operates within.”
Continue reading the main story
And Google said: “We comply with all the tax rules in the UK. We make a substantial contribution to the UK economy through local, payroll and corporate taxes.”
Mr Bacon said that Starbucks’ move will likely have an effect on its fellow US giants.
“I suspect what companies do is when they see their name in the public lights and they don’t like it and then they take action,” the MP said. “I don’t think there will be many people who stop using Google… and probably for their Christmas shopping lots of people will still use Amazon.
“But the problem for Starbucks is there is a coffee shop on every High Street.”
Companies pay corporation tax on any profit they make in the UK, not their revenue or takings. Hence, allegations that multinationals move money to other countries to reduce how much tax they pay in the UK.
John Whiting, director at the Chartered Institute of Taxation, told the BBC that Starbucks was trying to protect its image.
“I think what it demonstrates is that companies big or small do care about their reputation,” he said.
“I mean, you can say Starbucks depends on its coffee….but a real key thing they depend on, is what people think about them, the trust. Do they like the image they portray?”
