The latest Oxfam inequality report tells a staggering story about global inequality in a world that is richer than ever.
Twenty two of the world’s richest men have as much wealth as all the women and girls in Africa while the world’s billionaires enjoy riches equivalent to half the world’s total population.
The UK has 1980s levels of inequality despite growing riches and with no sign of a turnaround any time soon.
Read our Independent op ed urging Chancellor Sajid Javid to tax wealth more effectively as he bids to “level up” the UK.
Wealth inequality in the UK has increased since the financial crisis, according to a major new survey from the Office for National Statistics. Tax Justice UK is calling on politicians to increase taxes on wealth to tackle this problem.
The ONS Wealth and Assets Survey provides a rich picture of wealth in the UK since the Brexit referendum. It shows total UK household wealth grew to £14.6 trillion between June 2016 and July 2018, with pensions (£5.36 trillion), property (£4.49 trillion) and financial investments (£1.84 trillion) accounting for the bulk of Brits’ wealth.
Robert Palmer, Executive Director of Tax Justice UK, said: “These figures reveal that wealth inequality has increased over the last decade and remains stubbornly high. This has real world consequences. Access to wealth gives you more life opportunities and better health.”
“Inequality has been a major talking point in this election. Taxing wealth more has to be part of the solution if we are to get the public services voters consistently say they want.”
Increased wealth inequality has been driven by fewer people owning their own homes, while at the same time property prices have risen for those lucky enough to be home owners.
Households with private pensions saw a 42% increase in the value of their pot, property wealth grew by 13%, and those with financial assets saw a 16% increase in value.
There is a widening gap between the haves and the have nots, with wealth inequality increasing over the last decade. Key points include:
Meanwhile, new figures from the OECD released today show that the UK is in the middle of the pack when it comes to how much tax the government raises, with 33.5% of UK GDP raised as tax revenue. The UK ranks 20 out of 36 wealthy countries, behind Spain and Germany.
Robert Palmer said: “As well as being a fundamental building block of a decent society, tax has a crucial role to play in rewiring the economy so it is more equal. The OECD’s league table shows that there is plenty of scope for higher levels of tax as a proportion of GDP if you compare the UK to similar countries.”
With all the manifestos now published it is hard to recall an election with a bigger gap of ambition between the main political parties.
So in summary, what are the parties offering on tax:
The Conservative manifesto was the dog that didn’t bark. Heavily trailed promises to slash inheritance and corporation tax and increase the higher income tax threshold didn’t materialise. An increase to the national insurance allowance does feature but is likely to mostly benefit the already comfortably off.
The Conservatives have promised reviews of both business rates and entrepreneurs relief. Our Manifesto for Tax Equality highlighted how these are not fit for purpose, so it’s welcome to see action promised. There were also vague promises to limit the “arbitrary tax advantages for the wealthiest in society,” showing how the centre of gravity on tax and spend is moving leftwards.
The Labour Party’s tax and spend pledges continue to make waves and it’s not really surprising given the bold policies outlined in their manifesto. These include income tax increases for people earning £80,000+ and a rise in corporation tax. The party’s 20 page roadmap for cracking down on tax avoidance and evasion included many of the recommendations in our own manifesto.
Labour also adopted our campaign ask to tax income from wealth at the same rate as income from work. This is a really welcome step forward.
The Liberal Democrat manifesto charts a middle course. An evergreen pledge to put a penny on income tax, was earmarked to the NHS. In line with our manifesto asks, the party will also end the tax free allowance on capital gains and nudge corporation tax up to 20%.
The Green Party set out a bold approach to increase taxes on wealth. They matched Labour’s plans to tax income from wealth the same as income from work. They are the only party to have a comprehensive proposal to reform the taxation of property. This was matched by a commitment to increase corporation tax.
The Scottish National Party was the latest to reveal their plans. Their manifesto calls for a reversal of austerity, tax devolution and better resourcing for HMRC and Companies House. But it shares none of the ambition on taxing wealth that is a feature of the Labour and Green manifestos.
On curbing tax evasion and avoidance there is a stark difference between the £12 billion Labour is promising to find compared to the Liberal Democrats £5.7 billion and the modest £640 million promised by the Conservative Party.
Tax Justice UK will continue to campaign for a fairer and more progressive tax system. Whoever wins the election, we will hold them to account for their promises.
Read our full Manifesto for Tax Equality for our vision of what a better tax system would look like.
The Conservative manifesto, launched on Sunday, opted for a safety first approach to tax, pledging no increases in income tax, national insurance or VAT. Their plans mostly bake in the cuts to public services we’ve seen over the last decade, with only a few limited spending increases.
Almost as interesting as what’s in the document, is what didn’t make the cut. Pre-election promises to cut taxes on the wealthy and companies were dropped. Rumours about changes to inheritance tax and stamp duty also didn’t materialise.
This shows how the centre of gravity on tax and public spend is moving leftwards. The manifesto even promises to limit the “arbitrary tax advantages for the wealthiest in society”. Boris Johnson and his team clearly felt that it would be bad politics to go into an election promising lots of giveaways to the well off.
It’s true that the big tax pledge of increasing the national insurance threshold from £8,500 to £9,500 will mostly benefit better off families. But this change will still be sold as a broad, and limited, tax cut.
The Conservatives have promised reviews of both business rates and entrepreneurs relief. Our Manifesto for Tax Equality highlighted how these are not fit for purpose, so it’s welcome to see action promised.
The manifesto also includes a number of welcome, but modest, measures to tackle tax avoidance and evasion. But unlike Labour, which is rethinking how to tax big global companies, the Conservatives have just reiterated their pledge to introduce a relatively modest tax on digital companies.
But with an ageing population, and growing pressure on public services, future governments are going to face huge pressure to spend more, and increase taxes to help support this. Given that most people haven’t had a pay rise in over a decade, any future tax rises should focus on those who best able to pay.
Labour’s detailed plan to crack down on tax evasion and avoidance is welcome.
The public is fed up of endless stories about big companies or wealthy individuals paying so little in tax. Reducing tax avoidance by multinational companies is hard. Labour is taking the right approach by reforming the way in which global companies are taxed in the first place.
Labour’s Fair Tax Programme includes many of 33 policies in Tax Justice UK’s Manifesto for Tax Equality including:
All main parties are now making promises to crack down on tax avoidance, but as always the proof will be in the pudding. We will be holding politicians of all parties to account to ensure they deliver on their promises.
Labour has promised to tax income from wealth at the same level as income from work in its manifesto launched today. This has been a key demand of Tax Justice UK.
Taxing income from wealth at the same level as income from work would raise £14 billion a year according to the party’s costings. Labour plan to do this by taxing capital gains and dividends at the same rate as income tax.
We’ve been campaigning hard with Oxfam and the Institute of Public Policy Research for this change and it was a key element of our manifesto for tax equality. A recent opinion poll we commissioned with YouGov found that almost 70% of the public backed the measure.
The manifesto also promises a clamp down on avoidance and evasion whilst committing to review of the bloated system of tax reliefs, an issue we highlighted in our Inheritance Tax report last summer. It also reiterates the party’s commitment to reforming how global companies are taxed.
However, Labour has pulled its punches in other areas. The party has promised to change some of the rates on inheritance tax and council tax, but it has failed to engage with the fundamental reform that is needed to bring these taxes into the 21st century.
Have a look at our analysis of tax pledges from the Conservatives, Lib Dems and the Greens.
Read our analysis of the full Conservative Party manifesto here.
Tax took centre stage this week as Boris Johnson confirmed his well trailed plan to raise the National Insurance threshold.
In an unguarded moment Mr Johnson let slip the Conservative manifesto will include a promise to raise the National Insurance tax free allowance from £8,600 to £12,500.
The Institute for Fiscal Studies estimate that such a change would cost £11bn a year and would largely benefit higher earning households.
Depending on how the policy is implemented, the poorest workers could see up to 63% of the tax cut clawed back through a reduction in their Universal Credit payments.
Increasing the National Insurance threshold is a badly designed way to help those on the lowest incomes. It would be much better to reverse some of the £12bn in benefit cuts announced in 2015.
Elsewhere there was a mixed bag of tax promises from the Greens and Liberal Democrats when their election manifestos launched.
We were pleased to see many ideas from our manifesto for tax equality picked up by the two parties.
The Green Party promised to tax income from wealth the same as income from work, raise corporation tax to 24% and replace the increasingly unfair council tax with a land value tax, measures that reflect our priorities.
However, Tax Justice UK advisor, Richard Murphy, cautioned that the Greens’ plan for a £76 billion carbon tax would need to avoid hitting the poor hardest.
The Liberal Democrats pledged to end the tax free allowance on capital gains and to raise corporation tax to 20%. Their manifesto included an oft-repeated promise to put a penny on income tax and ‘increase’ the digital services tax. It includes welcome measures to crack down to tax avoidance.
Today, at the start of the 2019 general election, we set out 33 policies for tax justice.
After ten years of cuts to public spending, there is now widespread consensus that more investment in public services is required. In this election, all of the main political parties are committing to major increases in public spending.
We're calling on politicians to address tax inequality, curb tax avoidance and improve the administration of the tax system. We want to restore people’s sense of having a stake in the system.
Our manifesto sets out costed policies that could raise £69 billion. It also includes measures where detailed costings are unavailable which could raise significantly more.
The manifesto was put together with Taxwatch UK and is endorsed by the Equality Trust, Tax Research UK, the Women’s Budget Group, Church Action on Tax Justice and Jolyon Maugham, QC. We worked with leading academics, researchers and campaigners to develop the set of proposals.
Our manifesto urges politicians to:
Deal with tax inequality
Curb tax avoidance and evasion
Make tax accountable
Download the manifesto:
Over the last decade there has endless stories about how individuals and companies have slashed their tax bills through clever accounting practices. This is often because one part of the tax system undermines another part, an effect that economists refer to as “spillovers”. For example, if a tax haven has no corporation tax this can encourage businesses to artificially shift their profits to that country and away from a country with a higher tax rate.
Spillovers can happen between two countries, but can also happen within a domestic tax system. A case in point is that in the UK the income tax system is undermined because some people are able to turn their income into capital gains, which are taxed at a lower rate.
In order to ensure that companies and individuals are properly taxed it is vital to understand the impact of these spillovers in a structured way. That is why Tax Justice UK has joined up with Oxfam, ActionAid, Eurodad and Tax Justice Network to call for countries to carry out regular spillover assessments. Read the full declaration here.
This builds on the work carried out by ActionAid and by Richard Murphy and Andrew Baker on how to do these types of assessments.
An overwhelming majority of Brits believe those rich enough to live off their wealth should pay at least the same level of tax as others who go out to work for a living.
A YouGov poll commissioned by Tax Justice UK and Oxfam found that 69% of people felt people living off income from things like stocks and shares should pay the same level of tax as those who work for a living. A majority (52%) also agreed that the wealthy (net wealth over about £750,000) should be subject to a net wealth tax.
The survey demonstrates that far from being a revolutionary idea, the notion of wealth being taxed the same as income has substantial support across the political spectrum from Tories and Brexiteers to Labour and Liberal Democrat voters.
At the height of Margaret Thatcher’s reign in 1988 the same basic unfairness was ended when her Chancellor, Nigel Lawson, brought the taxation of capital gains into line with that of income from work.
A recent report by the Institute for Public Policy Research found that £90 billion could be raised over five years for public services by bringing capital gains and income tax into alignment.
This isn’t a policy that would hurt asset rich, but income poor, grannies. The IPPR found that 90% of capital gains currently taxable are received by people earning £100,000 a year. Getting rid of the low tax lifestyle enjoyed by these already wealthy people is doable without affecting pensioners.
This is now a no-brainer for any Government. Failing to back this policy wouldn't just be bad economics, it would go against the grain of public opinion too.
We need to put an end to wealthy hedge fund managers who pay a lower tax rate than their cleaners.
More details and a detailed breakdown of the poll findings are here.
All the figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1,642 adults. Fieldwork was undertaken between 22nd - 23rd September 2019. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+). The full results are available here.