Corporations that pay little taxes
TAXATION, not surprisingly, is a very controversial subject and while most people accept and understand the need for governments to raise taxes, they also reasonably expect that collection and subsequent spending of taxes is equitable.
The revelation that American-based Starbucks Coffee retailer – globally the second-largest restaurant or café chain after McDonald’s – had paid less than one per cent corporation tax despite generating US$4.5 billion of revenue from over 700 British branches during a 14-year period shocked many.
Over the last three years, Starbucks has reported no profit and paid no income tax on sales of US$1.8 billion in Britain.
Apparently the company has broken no laws, only making every possible use of existing tax legislation.
But you don’t have to travel 4 000 miles across the “pond” to find similar examples; they exist right on our doorstep.
Carnival Corporation, the world’s largest cruise operator with its 12 dominating brands, is a classic case in point. Despite declaring a profit of US$11.3 billion during the last five years, Carnival paid no United States Federal taxes at all last year, even though, in essence, it is headquartered in the United States.
In fact, over that same five-year period, while using the services of 20 federal agencies such as the coast guard and customs, it paid an average of 1.1 per cent in federal, state, local and foreign taxes.
For a hotelier or other land-based tourism-business [owner], that must seem like an unattainable dream become true.
Even if you choose to ignore all the one-sided advantages the cruise ship companies have, you cannot escape their ultimate commercial option: if the going gets tough, they just move the ships to where they can extract higher revenues and profits.
The shipping companies will argue they pay lots of other taxes, but do they really?
In many cases port fees are now included in the purchase price – but the operator merely acts an intermediatory, collecting them from the customer. Certainly with any Carnival group product it is clearly stated, but not government taxes which are an added extra payable, again, by the cruiser.
You also have to ask what taxes are paid on the items consumed by passengers, like food and beverages. Absolutely none, I suspect.
Do they pay the majority of their staff National Insurance contributions or any portion of any applicable personal income tax?
I am also pretty certain any form of land tax doesn’t enter into the equation.
Then look at pay and working conditions: I cannot imagine any reputable trade union, either in the United States or Caribbean, allowing the commonplace practices that shipboard crew have to endure to be tolerated here on land.
Of course, cruise operators largely depend on nationals from poor and developing countries – like the Philippines, where an agricultural worker may earn as little as US$4 a day.
The very low wages are the norm, hugely enhanced in the overwhelming number of cases by gratuities, again, from passengers.
This week is one of the busiest of the year for Bridgetown Port, with their website indicating some 22 ships arriving and departing. Boxing Day alone could welcome up to 9 000 passengers based on the ships’ capacity.
Hopefully, some taxes will be left here on Barbados while visiting our attractions, activities, restaurants and shopping.
This may, in some way, help sustain our disadvantaged land-based tourism players who, unlike Carnival Corporation, already pay lots of taxes.