Tax Justice UK

What's Amazon's tax bill?

7/6/2023

The answer may surprise you. Despite making a £222 million profit, Amazon's main UK division paid no corporation tax in 2022.

Because of government tax breaks, this is the second year in a row that this part of Amazon has paid no corporation tax here.

In fact the UK government actually gave Amazon money last year: £7.7m in tax credits for making investments in infrastructure, which they likely would have made anyway.

This would be an appalling situation at any time – but during a cost of living crisis when our public services are crying out for better funding, it’s an outrage.

That’s why we’re taking action.

We’ve teamed up with 38 Degrees to demand the government scraps tax breaks for Amazon – and other huge corporations.

They must close tax loopholes and stop handing out subsidies to tech giants that don't need them. Sign the petition:

Stop tax breaks for Amazon

Summing up the dire situation, Paul Monaghan chief executive of our ally the Fair Tax Foundation told The Guardian:

“Amazon UK Services is not only not paying tax, but is being handed tax credits for investment that almost certainly would have happened anyway. Tax credits for old rope, if you will.

Amazon workers strike

At the same time Amazon is resisting giving it's staff proper cost-of-living wage increases.

Amazon workers in Coventry are currently on strike, demanding their wages increase from £11 to £15 an hour.

Amazon workers in other locations are currently balloting to strike.

Big multinational corporations like Amazon must be made to contribute to the UK through taxes – and paying their workers properly.

They must not be given a free ride by the UK government.

What if we taxed Rich List families 2% on their assets?

1/6/2023

We’d raise £22 billion a year if we taxed the assets of the UK’s 350 richest families at 2%.

It’s a proposal we pushed in the media this week after the Times Rich List revealed the wealth of the super rich continues growing.

We worked jointly with the New Economics Foundation and the Economic Change Unit to do the research.

The £22 billion that could be raised would be enough to fund the construction of 145,000 new affordable homes a year. Or pay the wages of nearly a third of NHS staff.

The Guardian and Mirror both covered the research, running supportive articles on our case for taxing the UK’s richest families more

Our Executive Director Robert Palmer was on BBC News arguing that evidence shows super rich people don’t tend to emigrate if you tax them more.

‘Wealth taxes will cause the rich to flee’: 12 wealth tax myths debunked

25/5/2023

Wealth taxes have huge popular support: 78% of people in the UK support higher taxes on those who own assets worth over £10 million.

When it comes to convincing politicians, however, the issue of wealth taxes can become more contentious.

We asked our readers to send a message to their MP requesting they back wealth taxes. 6,500 emails were sent to over 98% of MPs. (You can still send a message here).

We received some supportive responses from MPs. But many were critical. Negative responses to taxing the super rich more aren’t uncommon.

We decided to respond to some of these criticisms – so below we debunk the most prevalent myths around wealth taxes.

1. Don’t the richest already pay the most in tax?

Often the very rich will be paying more pound for pound in tax than less well off people, but their tax rate (IE the percentage of their income they pay) will be much lower. For example the top 1% of earners contribute a third of all tax income received by the Treasury pound for pound. However the bottom 10% of earners have an effective tax rate of 44%, which is more than twice as high as those in the top 0.01% (21%). We believe this is unfair. A billionaire should never pay a lower percentage of income tax than the secretary or cleaner in their office.

2. Doesn’t the UK already have taxes on wealth?

The UK does have some taxes on wealth but these do a very bad job of ensuring that very rich people pay their fair share. The UK is also lagging behind changes made in many other countries. In Spain, a net wealth tax was implemented in 2011, which has led to an increase in the number of taxpayers and the amount of revenue collected.

In the US, President Joe Biden is looking to introduce new taxes on billionaires to invest in green growth, lowering inflation and cutting the US deficit. If just one of Biden’s policies was adopted in the UK - the introduction of a tax on ‘share buybacks’ - we could raise an extra £2 billion a year, according to the think-tank IPPR.

3. If wealth taxes are increased, won’t rich people just move abroad?

Studies have shown that most wealth holders who live in the UK have ties here, want to be here, and want to contribute as citizens. Tax levels are a minor factor in their decision to relocate in comparison to factors such as family and social ties, schooling, and overall economic stability. Our tax proposals would only lead to a very small amount payable relative to the net worth of people’s assets. For example, our proposal for a 1-2% tax on those with assets over £10 million, would mean someone with £10 million in assets would pay an additional £10,000 - £20,000 a year. This would create a minimal incentive for individuals to leave, which itself carries significant costs.

Existing evidence on reform of the non-dom status showed that increasing taxes on the super-rich led to a minimal number of individuals leaving the UK. Reforms in 2017, which restricted access to the non-dom regime, led to just 2% of those who had been in the UK for fewer than 3 years leaving, the number was significantly lower for those with longer- term ties to the UK.

4. In Norway, wealth taxes have lead to the rich fleeing the country

The recent experience of a marginal increase in wealth taxes in Norway has led to some misleading and hyperbolic media reports that the rich are fleeing. Of 236,000 millionaires and billionaires in Norway, the relocation of 30 – while substantially higher than in previous years – still amounts to a mere 0.01% of Norway’s millionaire and billionaire population. The lost revenue from the leaving millionaires comprises a small percentage of the revenue gained from the increase. For any substantial cost to the economy to occur, academics Arun Advani and Andy Summers, have estimated that the migration response would have to be more than 15 times larger than this.

5. Can’t the rich just voluntarily pay more tax if they would like to?

This misses the fundamental point that tax is designed to raise revenue for shared, public services. If just a few opt to pay more, it would not provide the level of investment our public services and economy so urgently need. It’s also about fairness. Why should one group get to decide if they want to pay tax – while others don’t have that choice? Workers, for example, can’t decide if they want to pay income tax. It is the government's responsibility to create a fair tax system that is compulsory, not voluntary.

6. The 2020 Wealth Tax Commission said that introducing a wealth tax in the UK would be hugely complex, and that instead of an annual wealth tax, the government should reform existing taxes on wealth.

This isn’t quite correct. The Commission made various recommendations, none of which precluded the feasibility of an annual wealth tax to act as a solution for ongoing structural inequality and long-term public financing. The Commission was assembled to assess wealth taxes as a solution to the public finance crisis left by COVID-19. In this context, the Commission recommended a one-off wealth tax would be simpler and more efficient to implement than an annual wealth tax, as a solution to the COVID-19 crisis. This is because a one-off tax is an exceptional response to a particular one-off crisis.

The Commission also recommended a package of reforms to existing wealth taxes as a priority, including capital gains, inheritance tax and council tax, since the existing system is complex, dysfunctional and unfair. And it also concluded an annual wealth tax would be feasible in addition to these measures, and also the best mechanism if the aim was to specifically reduce inequality. Fixing existing taxes or levying a one-off tax will not rebalance long-term structural inequality.

Additionally, setting a very high threshold for an annual wealth tax makes it vastly easier to administer. At a £10 million threshold, it would only affect 0.04% of the population – approximately 20,000 individuals.

7. We have the highest peacetime taxes in the country’s history, we can’t raise taxes anymore.

The level of taxes in the UK is about average compared to similar countries. Many European countries have much higher levels of tax than the UK. At Tax Justice UK, we don’t want to raise taxes on working people. We want to raise taxes on super rich people who derive their income from wealth. The effective tax rate on working people is the highest it’s ever been, while the richest in our society, whose wealth is ballooning by tens of billions of pounds every year, pay a much lower tax rate. For example, Rishi Sunak, who earned nearly £2 million in 2021-22, has an effective tax rate of 22%, while an average doctor in London pays 40% in tax. This is because taxes on income from wealth are much lower than taxes on work, and the Prime Minister made most of his income from returns on dividends and capital gains.

In this context, the government has chosen to increase taxes on working people (by freezing income tax thresholds) rather than looking to the wealthiest. In fact even the wealthiest pay very different rates of tax, depending on the source of their wealth. A study found, the average person earning more than £2 million had an effective average tax rate of 40%, while the average person with total remuneration of £10 million from capital gains, has an effective tax rate of just 21%. It’s even unfair for the super-rich!

8. We don’t need more taxes. Taxes already fund public services adequately.

The majority of the British public would disagree with this statement. The state of the NHS is the third most cited public concern currently, running behind the economy and inflation. Polling from October 2022 found that a third (34%) of the public thought taxes and spending on public services should remain at current levels, while 26% thought there should be an increase in tax to increase funding. Only 22% said that taxes should be reduced and less spent on public services.

9. Inequality in Britain is not something to be concerned about

The UK has a very high level of income inequality compared to other developed countries. We are the second most unequal country in the G7 and one of the most unequal countries in Europe. Vast levels of wealth inequality are destabilising for society and democracy and the majority of people in the UK are concerned about it - recent polling from the Fairness Foundation found that seven in ten are concerned about a society in which some have wealth of over £10 million while others live in poverty.

Inequality in the UK has been high since the 1980s, with the share of income earned by the top rising, peaking at 14.7% in 2007 before the financial crisis. This is almost double the corresponding figure for Belgium (7%) and still higher than Australia (9%), Sweden (8%) and Norway (8%), to name a few.

Wealth in Great Britain is even more unequally divided than income. In 2020, the ONS calculated that the richest 10% of households hold 43% of all wealth. The poorest 50%, by contrast, own just 9%. The wealth gap has reached record levels, thanks primarily to the appreciation of assets such as property, relative to the decline in household incomes.

10. Wealth taxes would be bad for the economy and business

There are many compelling arguments that higher taxation of wealth in the UK could contribute to a more dynamic economy and stimulate growth, and that extreme concentration of wealth has damaging economic effects. Investments made by the super-rich tend to be less productive than those made by working people. Investing in share buybacks and dividends, for example, diverts financial resources away from the ‘real’ economy and reduces productive investment.

With the UK having suffered decades of low productivity and wage stagnation, an increasing number of academic studies are finding that fairer taxation of wealth is a path to a healthier and more dynamic economy. Redistribution can create a healthier economy in which working people have more financial freedom, thus raising demand for goods and services and benefiting British businesses and high streets. Tax Justice UK has set out how six changes to taxes on wealth could raise £50 billion annually to invest in health, education, research and development, and national infrastructure, creating a healthier and happier workforce and encouraging productivity growth.

11. Billionaires create jobs (e.g., Amazon has over 1 million employees). Will they stop doing so if we tax them?

High taxes on corporations and the wealthy existed side by side with record-high levels of job creation and increases in standards of living across the developed world for 50 years. The top rate of corporate tax in the US averaged above fifty per cent in the 1950-1960s. Furthermore, slashing taxes means that governments have much less to invest in the economy, which itself stunts job creation. Many thousands of teachers, nurses, firefighters, and scientists cannot be hired when the super-rich do not pay their fair share in taxes.

12. If a wealth tax didn’t work in France, why would the UK be any different?

France’s wealth tax is often cited as an example of why wealth taxes don’t work. The French wealth tax was in place until 2017 when it was abolished by current President Emmanuel Macron and replaced with a similar tax on property, not business or shares. It has been noted that the previous wealth tax did not raise significant revenue - just 5 billion euros in 2015 which was less than two percent of France's tax receipts.

The tax implemented in France is vastly different to the policy we at Tax Justice UK propose for the UK. The French tax had a low threshold, with households with assets in excess of €1.3 million liable. Whereas the policy recommendation for a UK wealth tax sets a very high £10 million threshold. This limits the number of people that would need to pay the tax - in the UK it would only be 20,000 individuals compared to 343,000 households in France - which makes it far less complex for HMRC to administer. Setting a high threshold also allows exemptions to be limited. This was a significant issue in France, where badly designed loopholes enabled avoidance and limited the tax’s revenue potential.

It is also worth noting that the repeal of France’s wealth tax prompted backlash from a significant part of the population, and the reinstatement of the wealth tax was one of the main demands of the ‘gilets jaunes’.

Why are corporate profits soaring in a cost of living crisis?

3/5/2023

Oil companies have been announcing huge profits this week. Today Shell reported a £7.6 billion profit in the first quarter of the year. While BP made £4 billion profit.

In a cost of living crisis fuelled by soaring energy costs, these profits are obscene.

I was on GB News on Tuesday calling for a beefed up windfall tax – and an end to the tax loopholes used by oil companies – to claw back some of that profit.

Boom time for the rich

Both Shell and BP are using those profits to reward their shareholders. Firstly by increasing the dividends they pay shareholders. Secondly, by share buybacks. This where a company buys its own shares in the market in order to boost the listed price, further rewarding shareholders.

But it’s not just oil companies. Across the UK many big companies are posting huge profits, as their prices soar. The top 350 companies in the UK have doubled their profit margins since 2019, research from Unite the union found.

Why is this happening? Many companies are using the cover of inflation to push their prices up beyond their increased costs and so making more profit. Unite has dubbed it “greedflation”.

Overall, this means that the ‘flows of wealth’ from ordinary people to the rich are increasing. And this is driving inequality.

Inequality growth in the UK has been put into hyperdrive by this cost of living crisis, as big companies and the rich drain more and more wealth from the rest of us.

We need to act together

It’s never been more urgent that we tackle this inequality. And that means addressing the ballooning wealth of the super rich.

We’re in a cost of living emergency. Those with broadest shoulders must be made to pay more tax to support the country and society that have helped them thrive.

We have developed 6 wealth tax policies that could raise £50 billion a year. This money could be used to help support households struggling in the cost of living crisis – and better fund our NHS.

A lot of this is about fairness. We want to see those with huge wealth taxed at the same rate as those who work.

This would address the hugely unfair situation where those with income from huge wealth often pay less tax than those who work. For example, our prime minister Rishi Sunak paid an effective rate of tax of 22% on his £5 million earnings. This is the same effective tax rate paid by the average nurse.

How to use tax to tackle carbon emissions

27/4/2023

Tax is being used in new ways in the fight against climate change. On Tuesday European countries voted to create the world’s first carbon import tax.

The tax will be raised on goods entering the European Union. The rate will be based on the amount of carbon dioxide (CO2) emitted when the product is manufactured.

It attempts to stop European countries exporting their CO2 intensive production to nations with lower environmental standards. It aims to incentivise Europe’s trading partners to decarbonise their manufacturing.

This is an example of tax being used to incentivise better environmental behavior among companies and industry. Every country needs to do this to fight climate change.

A just transition

Last week climate activists, Extinction Rebellion held “The Big One” a four day rally to keep climate change on the agenda. However, we have a long way to go in the UK. According to a new poll, only a third of people think the government is doing enough to tackle climate change.

Indeed our government actually subsidises (IE gives money to) the oil and gas industry Since 2015 the government has given £20 billion more to fossil fuel companies than han the renewables industry.

This needs to stop. We should not be giving polluting companies tax incentives to continue with business as usual.

Instead we should be using tax to encourage them to decarbonise their production processes.

At Tax Justice UK we also believe that the transition to a more sustainable economy will require huge investment from the government in industry and new technologies. But this transition must be just.

It should be paid for, in part, by taxes on the very wealthy and wealthy companies. We agreed on a set of principles for a just transition alongside other organisations including climate groups.

Tax can help us build a better future

20/4/2023

Tax Justice UK recently undertook a project to define its long-term vision.

We asked ourselves: what kind of country do we want the UK to be in ten, 20 or 50 years’ time – and how can we change the tax system to get there?

These aren’t abstract questions. With inequality growing, public services on their knees and an impending climate emergency, it’s never been more important to define what an alternative future could look like.

We've recently spent time with other members of the tax justice movement thinking about how we address these problems. Below is the result.

What's our vision?

Our country is facing four major crises. There is an alternative and the tax system can play a big role in getting us there.

The first crisis we identified was the state of our NHS and public services. They’re on their knees and need more funding to survive. Our vision is for good quality public services, supported in part by higher taxes on wealth and the biggest companies.

The second crisis is rampant inequality. A small minority hold huge and growing wealth, while everyone else is getting poorer, with the cost of living crisis accelerating these trends.

We believe a country where wealth and opportunities are evenly spread across the population is possible. How do we do this? The tax system needs to be rebalanced so that the super-wealthy are taxed significantly more, with the money re-invested in supporting the country as a whole.

The third crisis is climate and environmental breakdown. We need rapid decarbonisation and a transition to a more sustainable economy. The tax system needs to raise money to support efforts to tackle global heating. We also need to end the way the tax system subsidises carbon emissions, for example the current big tax breaks for new oil and gas exploration.

Finally, our democracy itself is under threat with power and wealth concentrated in the hands of so few. Our tax system currently favours this elite. We want to see a society where the tax system is set up to help the majority, not just the rich.

All of our work aims to resolve these crises, using tax to pursue the vision we believe is possible.

Austerity caused doctors to strike

13/4/2023

This week’s four day strike by junior doctors is a maddening example of how under-funding public services is slowly ruining our country.

Junior doctors are demanding a 35% pay rise. They start their careers on a salary of £29,384, which is below the UK’s average income. Whilst the average doctor’s salary is £57,118, their pay is £9,000 lower than it would have been since 2010 if pay had kept pace with inflation and we hadn’t had a decade of austerity.

This has taken a heavy toll on the NHS. According to The Times, Australia is seeing a surge of British trained health staff tempted by the promise of better pay on the other side of the world.

Is it any wonder that the NHS has a shortage of around 8,700 doctors?

In January MPs urged the government to train more doctors, but just weeks ago the education minister threatened to fine universities that do so.

The self defeating logic of austerity reigns supreme.

It’s obvious we need to invest in training more NHS staff but we should also be paying them a competitive wage so they aren’t tempted to move to the other side of the globe to work.

We can afford this. Our own research set out six wealth tax reforms that would raise £50 billion a year to invest in our public services.

Tax cuts to come?
Far from looking to increase taxes on wealth to help rebuild our public services, sources close to the government are agitating for tax cuts… again.

In truth, taxes are up under this Conservative government and the reason for this is in part because the NHS needs more, not less investment to keep a growing and aging population healthy.

It’s time we had a sensible debate about taxation with wealth taxation at the heart of it, if we are to stem the brain drain of doctors leaving the country.

Tax Justice UK will keep pushing for a better debate in the media and among politicians.

Millions pay a higher tax rate than Sunak

6/4/2023

The controversy over the Prime Minister’s tax details continued this week with a story in the Times.

New analysis from by the Economic Change Unit found that up to a quarter of all taxpayers pay a higher rate than the Rishi Sunak. This is despite the Prime Minister being a multi-millionaire.

Another piece in the Times sets out the unfairness of a system that taxes income from work more than income from wealth. This controversy looks set to run and run.

Should the state do more?
Most people get that without tax we wouldn’t have the NHS. But do people believe there should be a stronger social contract between the state and its citizens?

It’s a question that seems particularly urgent in the week that the government announced drastically less funding than was expected for social care.

In a series of opinion polls by our the Fairness Foundation people’s attitude to the state and the social contract were tested. Far from wanting a small state, Brits favour the state playing a key role in supporting people.

The largest majorities (above 80%) agreed that there is an important role for the state in delivering social care, early years and public transport.

If the reaction to the social care funding announced this week is any guide, we seem to have a government that is out of step with where the country is.

Hard times for billionaires?
It was a tough year for billionaires according to the latest Forbes Billionaires list published this week. In total the world’s richest people lost $200 billion, equivalent to the entire income of a country like Ukraine.

How much tax does the Prime Minister pay?

23/3/2023

On Wednesday the Prime Minister Rishi Sunak revealed how much tax he pays.

Sunak brought in £2 million in 2021 to 2022 – mostly from dividends and capital gains. He paid £432,000 tax on this income.

This makes the PM’s effective tax rate 22%. That’s the same tax rate as the average nurse making £37,000 a year, as our Executive Director pointed out on Twitter.

This is simply incredible. And it shows precisely what’s wrong with our tax system: the super rich take most of their income from wealth, not work. And taxes on income from wealth are much lower than taxes on work.

“The system is designed to allow wealthy people to pay lower rates of tax”, we told The Times.

What we’re proposing is simple. We want the same rates of tax on income across the board, regardless of its source. So those bringing in £2 million from dividend income should pay the same as those bringing in £2 million from work.

If this were the case, Rishi Sunak’s tax rate would be much higher. If we applied the same rules to every super rich person in the UK, we’d raise £14 billion pounds every year.

The value of shares, property and gold have hit new highs in the last year. It’s only a cost of living crisis if you don’t own a lot of assets.

Food prices skyrocket

While the Prime Minister's tax return gives a snapshot into how the super rich are doing financially, the cost of living crisis is getting worse for everyone else.

The cost of food has increased by 18% since last year, new inflation figures show. Goods and services generally are up 10%.

The skyrocketing cost of the weekly shop is bad for everyone, and is pushing many who were already struggling into poverty. The number of children in food poverty in the UK has doubled this year to 4 million.

This is unacceptable. The UK is a rich country, but wealth is increasingly hoarded by a small number of super rich people. While wages have stagnated over the last 15 years for everyone else.

Budget: tax breaks for big business and wealthy do nothing to ease the cost of living crisis

15/3/2023

A Budget that gives a £9 billion tax break to the biggest businesses and a multibillion pensions tax giveaway to higher earners is the wrong approach in the middle of a cost of living crisis.

Tax Justice UK Executive Director, Robert Palmer, said: “Jeremy Hunt tells NHS workers that we can’t afford to give them a pay rise during this cost of living crisis. Yet he just handed out a £9 billion tax break to the biggest businesses and promised a multibillion pension tax giveaway to the highest earners”.

“Thousands of NHS workers are using foodbanks, there won’t be a single nurse with £60,000 a year spare to take advantage of the Chancellor's pension tax giveaway”.

“The 12 new investment zones look like being glorified business parks - they tend to shuffle activity around the country rather than generate new enterprise.”

“The Chancellor’s measures on child care are welcome, but tax breaks for the well off and big corporations are not the answer to our cost of living crisis”.

“Jermey Hunt calls this his growth budget, but you can't have sustainable growth if our workers are getting sicker, can't get to work or have trouble accessing essential public services. We need greater investment in our NHS and public services now. Politicians should be taxing wealth not pouring more fuel onto the wealth inequalities that already exist in our society.”

A Tax Justice UK briefing shared with MPs ahead of the Budget set out six wealth tax policies that could raise up to £50 billion towards rebuilding the NHS and public services.

The briefing includes a proposal for a 2% annual wealth tax on people with £10 million in assets. This policy alone could raise £22 billion

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