By Robert Palmer, Executive Director Tax Justice UK
I’ve just got back from the Labour Party conference in Liverpool, where I was making the case for a fair tax system. I was joined by my colleague Rachael Henry, our Head of Policy and Advocacy. She was also at Conservative and Lib Dem conferences talking to politicians of all stripes. In Liverpool we met countless MPs, policymakers and journalists and pushed our message: that raising taxes on the super rich could fund a transformation in our NHS, public services and society. I was struck by how often wealth taxes came up. Almost every session we went to had someone asking about taxing wealth. The pressure on Labour is growing. This is a real sign of progress. Our campaign to change the public and political debate on tax is working. Keir Starmer, the Labour leader, used the conference to set out his vision for the country. He talked about the power of government to make people’s lives better. The Labour leader also doubled down on his commitment to tackle the climate crisis. Promising investment in the NHS, schools and green energy, alongside a massive programme of housebuilding, Starmer tried to draw a clear dividing line between Labour and Conservatives. Our schools are crumbling, NHS waiting lists surging, councils are going bankrupt all over the country. People are fed up and desperate for change. But while there were nods towards Labour’s past achievements, and a promise to rebuild Britain, there wasn’t much detail from Starmer on how this would happen. Some of this is to be expected a year out from the general election. But it did leave me wanting more. Where could Labour raise new revenue? The public realm is heading towards ruin. We need a plan to save it. We need major investment of public money over several years in our services to keep them running, and make them fit for a modern, future Britain. The question is does Starmer have a plan to save our NHS and public services? Labour has some excellent individual policies – like clawing back £7 billion lost in Covid fraud, ending non-dom status and applying VAT on private schools. But the tax rises that Labour has promised so far add up to just £5 billion a year. Given that the NHS budget alone is £180 billion a year, this won’t touch the sides. At Tax Justice UK, we’ve set out six wealth tax policies that could raise up to £50 billion a year. This would go a long way to rebuilding Britain. Labour could go further on their plan to tackle fraud as well. About 5% of the tax owed each year isn’t being paid. That adds up to at least £42 billion in missing tax. It could be recouped if HMRC were properly resourced. On the train home I was left feeling that Labour is too afraid to talk about raising and investing the huge amounts of additional money necessary to make good on their transformational vision.
Yesterday Rishi Sunak delivered an hour-long speech at the Conservative conference setting out his agenda. I was struck by the prime minister’s lack of vision. He failed to properly address the huge challenges facing the UK.
NHS waiting lists are growing and growing, while our schools literally fall apart. The cost of living crisis is throwing millions into poverty and turbocharging inequality; while climate breakdown becomes ever more obvious to all. Where were the solutions, the vision for the future? I couldn’t see it. To be fair, this lack of serious vision isn’t a failure only of the Conservatives. Labour’s leadership are also, putting it as politely as possible, tight-lipped on how they would solve the serious challenges facing the UK. Fairer taxes can help build a brighter future In this vacuum of political leadership, it’s never been more important for us to shout as loud as we can that there are solutions to these problems – that things can be done. That there is money to invest in our futures. We know the government has options. The UK could raise up to £50 billion extra a year by closing tax loopholes used by the super rich – and by taxing wealth more. Redirecting the massive private wealth of the super rich into our grassroots public services would reduce wealth inequality: taking from the rich and giving to ordinary workers. Taxing the super rich could also reduce gender inequality. A fascinating new report by the Women’s Budget Group (WBG), which we fed into, shows how men have on average 35% more wealth than women – it argues that taxing wealth more could help redistribute this and level the gender playing field. You can read more about our work on tax and gender with the WBG here. Politicians could also introduce new taxes on the biggest polluters – oil companies and polluting corporations – raising billions of pounds every year. This money could help fund a fair green transition: new renewable projects and better public transport, creating high quality jobs in the process. People want action now These options – to raise more revenue from the super rich and the super polluting – are all open to the government, and the public support them. A new report from our friends at the IPPR last week shows exactly this: people support higher taxes if that money is spent on public services. Our executive director Robert was on Sky News last week arguing that the public do not want to see more austerity.
A year on from her economy-crashing 44-day premiership, Liz Truss and her faction in the Conservative Party are making a comeback.
These tax-cutting, small state libertarians want to see lower taxes to benefit the rich and reduced public services to the detriment of the rest of us. They’ve been all over the media, focusing their efforts on attacking one tax in particular. They are lobbying the Prime Minister to abolish it. The tax in question? Inheritance tax. Inheritance tax is described as one of the most unpopular taxes in the UK – the most unpopular tax by some accounts. However, I’m going to try to convince you that inheritance tax, although flawed, is worth defending against the tax cutters. Because there’s a greater issue at stake here: inheritance tax raises significant revenue for our public services. At a time when our NHS, schools and other services are stretched to their capacity, it would be reckless to cut their funding. Will you have to pay inheritance tax? Let’s start with some facts about inheritance tax. Firstly, hardly anyone pays it. More than 96% of estates never pay inheritance tax. Although one in three people think they will have to pay it. This gap between perception and reality may partly explain the tax’s unpopularity. In reality, because of tax free thresholds and allowances, the vast majority of people can pass on up to £1 million to their children and grandchildren without paying any tax. Read the facts about inheritance tax on our blog. Secondly, abolishing inheritance tax would only benefit a small number of wealthy people: let’s not mince our words, it would be a tax cut for the rich. This week the Institute for Fiscal Studies estimated that if inheritance tax was scrapped, half the benefit would go to the top 1% of wealth holders, who would get an average of £1 million each in tax savings. Inheritance tax funds our public services My final point is this: inheritance tax raises important revenue for our public services. Currently it brings in about £7 billion a year. Forecasts estimate this will rise to £15 billion in ten years. Large numbers can sometimes seem vague or even meaningless, so let me put these into context. £15 billion a year is half of the UK’s day-to-day defence budget; it is nearly 20% of the UK’s education budget. That’s a massive amount of money when schools are crumbling and you can wait weeks for a GP appointment. Inheritance tax raises significant revenue for our public services. If it is abolished, it’s very likely that the money will have to be found from elsewhere (likely from higher taxes on working people), or that public services will have to be cut. I think you’ll agree that most people would support neither option. We’re pushing back against the tax cutters I understand that people have strongly held views on inheritance tax, especially as it is paid at a particularly difficult time for people as they’ve just lost a loved one. I do hope I have explained clearly why we at Tax Justice UK support it. We need to reform inheritance tax, not scrap it. Our Executive Director has been on TV in recent days defending inheritance tax, and pushing back against the tax cutters. I was on TalkTV with Julia Hartley Brewer on Monday, you can watch the interview in full: There’s a shorter version of the interview here on Twitter. We’d appreciate it if you could retweet it if you agree. Our Head of Advocacy and Policy, Rachael Henry, was also on LBC with Iain Dale pushing back against abolishing inheritance tax. You can listen here.
Our campaign to tax the most polluting companies and super rich individuals – and invest that money in renewables and the green transition – is growing.
This week Oxfam came out in favour of taxing the UK’s biggest polluters, citing our research. They want to see fossil fuel companies and the super rich pay much higher taxes. The charity estimates this could raise £23 billion a year. We fully back their call. This money could be invested directly into the green transition: in renewable energy and public transport infrastructure, creating high quality jobs in the process. A tax on emissions would ensure the wealthiest and biggest polluters pay the most for tackling climate change. It’s so important to avoid the bulk of the cost of dealing with the climate crisis falling on ordinary people. As the catastrophic effects of environmental and climate breakdown become clearer, it’s never been more urgent that we bring more and more partners onboard with our campaign. A huge civil society group like Oxfam coming out in favour of taxes to help deal with climate change is a big step in the right direction. We also joined together with 400 businesses and civil society groups yesterday to push back against Rishi Sunak’s plans to water down the UK’s net zero policies. You can read the letter here. We have the ear of MPs Not only are we building coalitions with big partners, we’re also making inroads with MPs. We regularly meet with senior politicians to make the case for a fair approach to tax and climate. Our Executive Director Robert Palmer is also on TV and radio, promoting our message – and pushing back against those defending fossil fuel giants. If you didn’t see it, Robert was on GB News last week debating Jacob Rees-Mogg on why a windfall tax on highly profitable North Sea oil and gas companies is a good idea. This is the work we’re doing week-in, week-out: building movements and partnerships – and spreading the message about progressive tax reform in the media, with politicians and the wider public.
One of the UK’s most powerful union leaders is piling pressure on Labour to back higher taxes on wealth.
This week Paul Nowak, general secretary of the Trade Union Council’s (TUC), suggested that a “modest tax on the wealthiest 0.3 per cent of individuals” could raise £10bn a year for public services. Nowak said: “Labour have already set out what they’ll do on clamping down on non-doms… But we think that conversation needs to go further.” “With living standards plummeting, public services on their knees, and rampant wealth inequality blighting every corner of the country . . . fair taxation must be a key part of a wider set of policies to help reset the economy to work for working people.” We can convince Labour The TUC and its constituent unions represent millions of workers, so Labour will not be able to easily ignore Nowak’s comments. The public supports what Nowak is saying. New polling shows that 61 per cent of people support higher taxes on wealth. If Keir Starmer and Labour make it into office at the next general election, they will face public services in an existential crisis. To truly stop the slide, Labour will need to spend more on public services. According to the party’s own rules, this will probably mean higher taxes. Raising income tax, or other taxes on ordinary households, will be politically difficult – and highly unfair during a cost of living crisis. Wealth taxes on the super rich, those who can afford to pay a bit more, will be one of their only options.
A crisis is gripping our country’s schools. More than 100 have been told to fully or partially close. There are concerns that school buildings are unsafe because of a construction material that can degrade over time – especially when not maintained properly.
The government was warned several times about the existence in schools of this material; and they scrapped a plan to refurbish all secondary schools when they came into office. Coming home to roost The crisis is a part of an endemic problem in the UK. Years of government underinvestment in public services has left us with crumbling schools and record NHS waiting lists, to name just two of the problems we face. Insufficient government funding is pushing our society to the brink – and crises caused by underinvestment will only increase in the coming years. Two weeks ago, the IFS put it bluntly: the UK faces a stark choice, either raise taxes, or face the decline of public services and the end of the welfare state as we know it. At Tax Justice UK we campaign for the first option. We want to see new wealth taxes levied on the super rich (those with net assets over £10m) – and existing taxes like Capital Gains updated so the super rich pay the same tax rate as working people. Wealth taxes gaining support We're making big strides towards these goals. This week over 300 millionaires, business people and celebrities demanded G20 countries intervene to stop the ballooning wealth of the super rich. A full list of the signatories – including businessman Ian Gregg, film producer Richard Curtis and musician Brian Eno – can be found here. And in a series about the future of government and state spending this week, the Financial Times said higher taxes on wealth look to be increasingly likely. Not only do we need wealth taxes to support long-term investment in public services, we also need them to help struggling households through the immediate cost of living crisis. New research we helped produce shows the public think neither the Conservatives or Labour are promising enough to tackle the cost of living crisis. And the next election will be swung by whichever party can propose the best solutions to it.
This blog is reproduced from the New Economy Digest. Sign up to receive the weekly newsletter here.
The cost of living crisis will swing the next general election. As the summer ends, political parties are gearing up for an impending general election. We may not know exactly when it will happen, but the issues it will be fought on are becoming clearer. The Bottom Line: How Bold Action on the Cost of Living is Key to the Next Election, a new report from the steering group of Stop the Squeeze (a coalition of 50 civil society organisations, including Tax Justice UK, campaigning for structural solutions to the cost of living crisis), sheds new light on a crucial one. The report sets out to discover what voters, and especially key swing voters, are hearing from the parties, how they are responding, and the kinds of messages and policies on the cost of living crisis that might sway them in 2024.
How to win over swing voters on the cost of living. The voter group dubbed 'Stevenage Woman’ (or ‘Disillusioned Suburbans’) by the think tank Labour Together will be particularly important in the next election. Representing 21.8% of the electorate in England and Wales, these voters are particularly well represented in the East of England, in London’s suburbs, and in the North East and West. They are young, economically insecure, worried about their finances, and unlikely to own their own homes. They are not highly politicised, but are generally socially conservative while leaning left on the economy. How this group votes will decide which party wins the next general election. As Labour Together say: “A working majority depends on Labour’s ability to convert their current support amongst Disillusioned Suburbans into votes at an election.” So how can political parties win over these crucial voters?
Five years ago we asked politicians, academics, campaigners and journalists what was the biggest thing that needed fixing with the UK’s tax system.
Almost without fail they responded that the UK doesn't tax wealth enough. They complained that the issue wasn’t even discussed outside expert circles. At the time there was almost no debate in the media or in politics about taxing wealth more. In five years things have changed dramatically – and we helped do that. We’ve moved the dial Celebrities now go on TV and radio to promote paying more tax, while politicians and journalists openly discuss wealth taxation. Last week for example, filmmaker Richard Curtis told BBC R4’s PM programme that he, as a wealthy person, was in favour of paying more tax to fund the NHS and public services. While the presenter of the BBC’s flagship political show Politics Live, Jo Coburn, said wealth taxes were “raised all the time” on the show. A week of wealth tax calls And Jo Coburn was right: wealth taxes were called for on Politics Live no less than three times last week. On Monday Christina McAnea of the union UNISON made the case for taxing wealth more to fund our public services. Then on Tuesday, Caroline Lucas MP asked “why don’t we have a debate on a wealth tax?” On Wednesday it was Paul Nowak from the TUC’s turn to make the case that the super rich should pay more tax. He set out his thoughts in a piece in the New Statesman co-authored with Patriotic Millionaire Julian Richer. On the same episode of Politics Live, presenter Jo Coburn pushed Labour shadow health secretary, Wes Streeting, asking: “is Labour really going to look at wealth taxes to pay for further investment in health?” This sort of debate would be unimaginable just a few years ago. And we’ve made that happen. Our research and appearances on TV and radio have moved the dial on wealth taxes – making them acceptable for politicians to countenance, and journalists to discuss with seriousness. Tax can help us build a fairer future We’ve come a long way in five years. But there’s still a lot to do, and we need to keep up the pressure. Our public services are at breaking point – the NHS is struggling to keep up with demand and needs serious investment to meet the needs of the future. While inequality grows every year, most people are becoming poorer through the cost of living crisis – while the rich sit back and watch their wealth balloon. At the same time we face a climate emergency – which will disproportionately affect the world’s poorest. All three of these challenges must be addressed through serious investment. If we are to be a fair and just country, that money must come from those with the broadest shoulders. It must come from taxes on the super rich. We’ve made huge strides over the last five years, making wealth taxes a possibility, openly discussed by politicians and journalists. We’re going to keep pushing, fuelling the media debate and convincing politicians to get behind wealth taxes.
Fairer taxes can help us build a brighter future.
A future where inequality is in retreat; where we’re tackling environmental breakdown; where our public services are properly funded to serve us well and our democracy is thriving. I’ve written more on our vision for a fairer tax system and why it matters here. But other changes – beyond reforming our tax system – are needed too. That’s why we work with other organisations who are campaigning in their own areas for a better future. More democracy, less inequality We have teamed up with Compass, an organisation which campaigns for democractic reform. We are supporting their call for a fairer and more democratic voting system in the UK. Our existing voting system tends to amplify the voices of a relatively small number of people. At the same time many millions on the margins of our society are ignored by the big parties. We believe this contributes to the great economic inequality we see up and down the UK. Compass’s report Winner Takes All: Why Economic Justice Now Rests on Democratic Justice sets out how our flawed voting system is contributing to high levels of inequality. Why? Our existing voting system tends to amplify the voices of a relatively small number of people, while many millions on the margins of our society are ignored by the big parties. This contributes to the great economic inequality we see up and down the UK, where certain areas and certain groups who politicians listen to do very well, while others flounder. That’s why we’re sponsoring a petition with Compass, along with the Equality Trust and The 99%. We’re asking the government and MPs to change the voting system to help tackle poverty and inequality. If you agree, you can sign the petition here. If we had a system where each vote carried the same importance – regardless of where it was cast – our democracy would be refreshed, and our politicians would serve us all better. A flourishing democracy goes hand in hand with an economy that works for everyone.
The official gap between the amount tax owed and what the government collects, has grown to £36 billion, new HMRC figures show.
The “Tax Gap” difference between the amount of tax that should be collected and the amount actually collected, grew from £30.8 billion in 2020/21 to 35.8bn in 2021/22. At the same time £1.5 billion went uncollected from wealthy people subject to self-assessment. Tax Justice UK Head of Advocacy and Policy, Rachael Henry, said: “The tax gap remains large and it’s worrying to see the amount of money uncollected from wealthy people continue to rise. “At a time when public services are on their knees it’s vital we are collecting all the tax revenue we can. HMRC inspectors are worth their weight in gold and the government needs to give HMRC the resources it needs to collect these outstanding tax revenues.” |
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