Following on from a recent post about companies who avoid paying tax. It’s interesting to try and understand why some companies have been much more vulnerable to protest about the issue – but some companies seem almost insulated from protest.
For examples, Starbucks has been hit by high profile boycott. Protesters from UK Uncut have been making their voice heard both outside and inside Starbucks across the country. (It has proved good news for Costa, who have recorded a record jump in sales over recent weeks – Costa attract 4m customers a week at Guardian)
It seems there is a certain receptivity to boycotting a high street coffee shop like Starbucks. In Oxford, if you don’t want to go to Starbucks, there are three Costas all within a couple of minutes walk. As a result of the furore over tax payments, Starbucks brand image has definitely been adversely affected. According to Market research, Starbucks is now less trusted than Parliament (link) and only slightly more than News International.
However, interestingly, Amazon has been much less affected by the fallout than Starbucks. It’s much harder to organise a boycott of online companies. It’s more fulfilling to go on the high street and offer a physical protest. As a customer, there is a strong incentive to join in the boycott.
But, while we are happy to walk a few extra metres to buy a different coffee, when it comes to the new monopoly Goliath’s of the modern age – Amazon and Google, would people feel strong enough about tax avoidance to look for alternatives?
The problem is that Google is not seen so much as a company in a competitive market, but an industry in it’s own right. To ‘google’ is a verb. We use google without really thinking about it. When we want to search for help in doing our homework, we probably type ‘economics help’ into google without thinking about all the billions they put through their Bermuda offices. (Google avoids billions in taxes through Bermuda – Independent)
Another issue is perhaps the free rider problem. We would like Amazon and Google to pay more tax, and we’d support the general idea of some kind of boycott to force them to make a tax offer like Starbucks. However, from a personal perspective, we still want to use Amazon and Google because it’s cheaper. The best would be if other people boycotted Amazon and Google to put pressure for them to pay tax. But, we still buy there.
Online, no-one is really noticing our choices. If we use google, no-one is going to be putting a banner in our face about tax avoidance. If we goto Starbucks on the High Street, perhaps someone will. Online shopping doesn’t lend itself to consumer solidarity.
After the tax protests, it is Starbucks who are making an offer to ‘overpay’ £20million of taxes. But, there is no offer forthcoming from Google or Amazon. Perhaps they feel protected. Perhaps they feel their brand is so strong and all pervasive, they can shrug off the odd criticism from MPs and outraged newspaper columns.
People might want big multi-national companies to pay more tax, but it is also true that Google and Amazon are also very convenient to use.
But, perhaps there is a danger of complacency by multinationals. Perhaps Google will see their brand suffer – though it is hard to imagine their market share of web search falling as a result of tax avoidance. But, who knows?