Starbucks Ireland low tax isues, causes protest and boycott. Other brands starting to surface. Brand anger.

I recently blogged about the problems Starbucks UK are having as a brand, following revelations about their low tax payments, particularly in the UK. You can read it here; http://streamabout.blogspot.ie/2012/10/starbucks-brand-that-was-loved-could-be.html

Now they're being faced with a boycott and further protests.

I was not terribly surprised to see a demonstration in Dublin on Friday outside their high profile outlet on Dame Street. The 'People before profit' alliance headed up by Richard Boyd Barrett in attendance, staged a peaceful lunchtime picket. In parts of the UK, it has not been so peaceful.

It's clear that Starbucks have minimised their Irish tax position as well.

According to The Irish Times, filed company accounts showed it paid less than 40,000 euro in taxes between 2005 and 2011 - 6 years. At the same time, it paid 5.7m euro to its parent in so called "royalty" payments thereby diminishing the tax it was required to pay in Ireland.

It is exactly these "royalty payments" that have created their UK problems.

Starbucks Ireland accounts show it made a "profit" for the first time last year of 524k euro on which it paid under 35k on tax - less than 10%. Only once in the previous 6 years did it record a tax payment - of 4k in 2008. Interestingly, in claiming "losses" that year of 5.5m euro, it still paid 1.3 million in royalties to its parent.

The Irish tax regime to attract investment at the standard 12.5% rate, has been constantly controversial. In the eyes of some, it is designed to promote widespread global tax evasion and is not based on the PR spin of investing in a young, vibrant Irish economy.

Starbucks will suffer as a brand, in these days of austerity because consumers don't like greed and corporate greed especially. Vodafone is now starting to get a mention. Notably too, a brand like Starbucks always had a bit of a "hippy honesty" and clearly their halo has slipped, or it was all pretend anyway. Image over substance.

Other brands that have the same issues will fall under the spotlight and be punished for it. Brand anger. A lot of people have themselves major difficulty in paying their tax and it will seem grossly unfair that corporates can avoid tax without penalty and largely, with Government consent.

As consumers suffer more and more, these issues are going to generate anger and brands are going to be punished. Starbucks suck will be a mantra.

It's a new issue that finds itself under the marketing umbrella, caused by austerity. And it signifies a change in consumer attitude that's going to grow. 

Brand anger.