UK’s Farage to Starbucks: Stop Playing Both Sides
Coffee giant Starbucks should stop aggressively promoting its sense of corporate responsibility if it plans to continue using tax strategies that help the company avoid paying high taxes in the U.K., a European lawmaker told CNBC Thursday.
The world's leading coffee brand faces a growing backlash over having paid little to no taxes at all on its British sales — which exceed 3 billion pounds ($4.8 billion). (Read more: Backlash as Starbucks UK Tax Avoidance Revealed.)
Nigel Farage, a leader of the populist U.K. Independence Party and a member of the European Parliament, told CNBC's "Squawk on the Street" that the coffee chain should "stop trying to have it both ways."
Farage, a relentless critic of Europe's bureaucracy, faulted burdensome European rules that encourage corporations to play "tax arbitrage" as part of a bid to shelter income in Europe's economies with more favorable corporate taxes.
In a statement to CNBC, Starbucks insisted it has done nothing wrong. The company said that it has paid over 160 million pounds "in various taxes, including National Insurance contribution for our 8500 UK employees and business rates."
While Starbucks' actions are questionable, Farage said, "actually here in Europe they're encouraged to do it." The European Union has "deliberately set up a corporate tax structure that says that [a company] can buy, sell or make profits and trade in 29 countries, but you only have to pay tax in the country where you're brass-plated."
Nonetheless, Farage blasted Starbucks for a double standard. CEO Howard Schultz often touts the company's sense of corporate responsibility, with its social initiatives nearly as ubiquitous as its shops.
"You can't on the one hand say, 'We're the good guys, we're clean, we adopt a very, very good corporate social responsibility model' and on the other, do what the European Union has encouraged you to do," said Farage, whose periodic outbursts against the European political establishment have made him near legendary on YouTube. (Read more: Euro Divides, 'Violent Revolution' May Loom: Critic)
"Make your mind up, Mr. Schultz: Either be the good guy and pay U.K. taxes, or stop selling the world this story," Farage said.