News out this week suggests that Amazon will pay almost nothing under the new Digital Services Tax. The government brought in the tax to try and get some revenue out of the internet giants. But the design of the tax means its impact will be limited.
According to news reports, Amazon plans to pass on almost all extra costs to third party sellers on its platform. It’s not just Amazon. Google has also announced that it will also pass on extra costs from the tax to customers.
Amazon’s UK tax bill last year was reportedly £293 million on sales of £13 billion. But it’s currently impossible to know how much tax the company should actually be paying. We need to lift the lid on company accounts to get a clearer picture of how much tax big companies need to pay.
The Digital Services Tax will supposedly bring in £500 million a year. This is a drop in the ocean compared to the amount that the UK loses through tax avoidance.
We’re calling on politicians to reform the way we tax big corporations. We need to end the current system that allows companies to unfairly slash their tax bills. Tinkering around the edge isn't enough. And it doesn't work.
Our partners at the global Tax Justice Network have set out how to comprehensively reform the global corporate tax system. Politicians should take notice.
The public wants action. 84% of people want politicians to close loopholes to stop tax avoidance.
But not all companies behave this way. The Fair Tax Mark is given to businesses that are fair and transparent on tax. There is another way.
The coronavirus lockdown saw Conservative voters shift in favour of higher taxes, according to our new report, “Talking Tax: How to win support for taxing wealth”. The report looks at attitudes on public spending, wealth and tax by Tax Justice UK.
A change in mindset among Conservatives forms part of general public support for higher taxes that we uncovered. The research was done in collaboration with Survation and the University of Sheffield.
In the long run it’s clear that Brits want fair tax rises to support better public services, tackle inequality and deal with the climate emergency. When you talk to people, there is no clamour for tax cuts. The middle of a recession is a bad time for broad brush tax rises, but higher taxes on the rich make sense and are popular.
Polling and focus groups carried out between the 2019 general election and the middle of lockdown also uncovered significant support for taxes on wealth, with 74% of people wanting to see wealth taxed more, including 64% of Conservative voters and 88% of Labour voters.
The proportion of Conservatives who said they were personally prepared to pay more tax to fund services went up from 41% to 46% between March and June. There was also strong Tory voter support for rumoured increases to capital gains, pension tax relief and corporation tax. Conservative support for higher corporation tax leaped from 61% in March to 74% in June.
The findings come as Chancellor, Rishi Sunak, mulls once in a generation changes to the way wealth is taxed ahead of the autumn budget.
Tax Justice UK used 11 focus groups and two major polls to test a number of policies under consideration by Mr Sunak. They include: taxing income from wealth at the same rate as income tax; reducing pension tax giveaways to higher earners and upping corporation tax. All measures were supported by a majority of the public. Conservative voter support for these measures was even higher than that of the general population.
The report also includes a shot across the bows amid speculation the government could cave in to US pressure against taxing digital giants like Amazon and Google.
It finds near universal anger with tax avoidance by corporations and the wealthy with 81% of people saying it is morally wrong for companies to avoid tax and 76% saying the same about tax avoidance by individuals.
The Trump administration is reported to reject a Brexit trade deal unless Boris Johnson drops the UK’s 2% digital sales tax which aims to recoup some of the tax avoided by multinationals.
Tax Justice UK is calling on politicians to finally fix the way we tax big multinationals and not cave in to pressure water down the rules.
Download the full report here.
Download the March polling results here.
Download the June polling results here.
*** The application period has now closed ***
Decolonising Economics, Tax Justice Network and Tax Justice UK want to understand how the UK tax system props up structural racism in this country and its tax havens. This includes the role of UK Overseas Territories and Crown Dependencies. In order to do this, we are commissioning a scoping project to understand what research exists on this subject at the moment and what avenues for future research might look like. We believe that at present there is limited research on the intersection between tax and racial injustice in the UK.
There are many ways in which we already know the tax system and racial injustice intersect including:
We want to work with a researcher to deliver a report covering the following:
This work could involve interviews with stakeholders in academia, activism and financial institutions who can advise on research that is available already or that needs exploration. As part of this process we will bring together a group of economic justice organisers and activists to provide an accountability mechanism for this research so that it supports their campaign strategies and planning. This group would meet once at the set up of the project to input into the scope of research and once more to review the draft report. Taking part in this process should be factored into the working days.
Budget: 20 days work at £300 a day for a total of up to £6,000.
To express your interest in carrying out this piece of work please share your CV and a short half page expression of interest on why you’re interested in the work, how you would carry it out and how your skills and experience will support its success. Please send these to firstname.lastname@example.org by midnight on 7th September.
Download this terms of reference here.
Tax Justice UK was asked to provide input into how the Scottish Government can achieve an inclusive and green economic recovery from the covid crisis.
Working with our partners in Scotland, we pulled together a short briefing outlining the what that the Scottish Government should do. They include:
You can read the full briefing here.
2015 marks a historic moment in British history - the point at which the debt created from bailing-out slave owners during the abolition of slavery was completely paid off by the tax payer. That's 180 years in which residents in Britain have been paying into the pockets of those who benefitted from the slave trade and continued to benefit from the compensation scheme that succeeded it. Naomi Fowler, at our sibling organisation Tax Justice Network, has done an incredible job at delving into this shocking fact. As is becoming more well known, this country’s wealth was in large part built on slave labour and colonial exploitation.
This isn’t just about the past. Those deep economic inequalities persist between white and Black, Asian and minority ethnic (BAME) households today. According to the Runnymede Trust, for every £1 owned by a white person in the UK, households of Indian descent have 90–95p, of Pakistani descent have around 50p, of Black Caribbean descent around 20p. Those of Black African descent and of Bangladeshi descent have a measly 10p. This matters. Wealth and income are what determine our security, leading to better health outcomes and a longer life.
The sad truth is that our tax system was built in a way that props up wealth inequality, and so is a driver of racial injustice. The huge disparity of wealth between white and BAME communities is entrenched by the UK approach to tax, which favours the wealthy, including white families whose wealth originates in slavery and empire.
Fair taxation is one of the building blocks of our communities, in part because it supports investment in public infrastructure and services that we all rely on. Over the last ten years the political decision to shrink the deficit by cutting services, rather than raising taxes, has had a devastating impact, with BAME women being hit the hardest of any group.
Academics in the US have done a great job at understanding the links between the tax system and racial inequality. Last month, Brakeyshia R. Samms, a self-described “Unapologetic Fiscal Policy Wonk," set out on Twitter a long list of American research on this dynamic. American academics have undermined the idea that the tax system is somehow neutral on racism and put forward concrete suggestions for reform.
In the UK we are much further behind, so the full picture is much harder to see as there is an almost total lack of research on the racialised dynamics of the tax system.
It’s not just how the system is set up and operates, it’s also about those within the system. As with many industries, there is still an unacceptable level of discrimination within the tax profession. In an article in International Tax Review, one senior international tax manager is quoted as saying: “There were three or four black people within the transaction tax group and we were never promoted. Eventually we left the Big Four [the leading global accounting firms] because we were never ever getting promoted”.
The Black Lives Matter protests around the world have brought much needed attention to structural racism and racial inequality. It’s important now for all those working on the economic system to ensure racial justice is a key part of our work. Politicians who would usually ignore the issue are taking notice, and so this is an opportunity to take forward our collective vision for economic justice.
At Tax Justice UK, we’re campaigning for higher taxes on wealth to support more investment in public services and tackle historic inequalities. We want to create a fairer, and more equal, world, that lifts everyone up. We reject the notion that the raising and allocating of government resources places any groupings in conflict with each other. This is because structural inequalities intersect so that, for example, justice for black and minority ethnic people cannot exist without justice for disabled black and minority ethnic people, and justice for women cannot exist without justice for trans women.
This isn’t just about which campaigns we run, it’s also about leadership. The mainstream tax justice movement in this country is very white, male and middle class. This has to change. We need to recognize the historic work on economic justice that has been led by communities of colour, and build our campaigns alongside them. We definitely don’t have all the answers, and we know that we have to listen and reflect more, as well as work harder to incorporate racial justice into our approach in a way that is rooted in accountable practices with these communities.
A first step is to understand what research is happening in the UK on the links between the tax system and race and what questions need to be explored further. We’re hoping to work with Tax Justice Network and Decolonising Economics on this.
Ultimately we won’t be able to achieve the world we want, with high quality public services, economic and social justice, without dramatically changing the way in which the tax system perpetuates racism.
We want to thank Guppi Bola from Decolonising Economics and Naomi Fowler from Tax Justice Network for their contributions to this blog.
Image credit: James Broad
The government is proposing to introduce a number of freeports around the UK. While there has been limited information provided on the specifics, the proposal is to have zones with lower taxes and regulatory standards. Tax Justice UK is deeply concerned that this would create micro tax havens dotted across the British countryside and fail to spur any new economic development.
Read our full response to the government's consultation. This response was supported by War on Want and the Women's Budget Group.
This blog originally appeared at the CLASS think tank.
Today Rishi Sunak announced a £30bn package to support jobs. This is on top of £160bn in spending already announced to deal with the crisis.
In usual circumstances this would be a lot of money, especially from a Conservative chancellor. But many have already questioned whether it’s enough given the scale of the economic turbulence we’re facing. The Labour shadow chancellor Anneliese Dodds dismissed it as “barely touching the sides”.
As well as more spending, Sunak revealed £8bn of tax cuts. Firstly, he has cut stamp duty on houses worth less than £500,000 until next March. This is an expensive policy, coming in at £3.8bn. The main result is likely to be higher house prices, as opposed to helping people get on the property ladder or doing anything for renters. It appears that the cut is structured in such a way that property investors and those buying second homes will also benefit. Shelter estimates that up to 230,000 people face eviction when the Covid-19 ban on evictions is lifted in August. Stamp duty is a bad tax, but this cut does very little to solve the broader problems with the housing market.
Secondly, the chancellor has cut VAT from 20% to 5% for six months for the hospitality sector. The impact of this is more nuanced. It’s likely to put more cash in the pockets of hard hit businesses who are struggling and have spent money on making their premises suitable for social distancing. This is good.
However, the big barrier to recovery for cafes, restaurants and hotels is people holding back from spending because of fear of catching coronavirus. While infections are still relatively high, and a second wave is possible, it’s hard to see things returning to normal.
Today demonstrated that there is a new consensus emerging in favour of higher government spending. The Prime Minister has repeatedly claimed that “austerity is over”. We must hold him to this promise. This means we’ll need a public conversation about how to support a bigger state. As Anneliese Dodds pointed out in her response to the budget announcements, tax rises in a recession are a bad idea as they dampen demand.
But in the long run, higher taxes are on the cards. As I argued in the Huffington Post this morning, politicians should look to taxing wealth as part of the solution. In the UK, wealth inequality is double that of income inequality, and we under-tax wealth. That’s why Tax Justice UK, along with 16 other organisations, are calling for ambitious tax reform to support a fairer and greener future.
Conditions on tax conduct, protecting jobs, global warming, executive pay and dividends have been revealed in the first “Project Birch” bailout of a company affected by the economic consequences of the coronavirus.
However, the government’s welcome move comes despite a lack of similar strings being attached to loans given through the Bank of England’s coronavirus corporate finance facility. It remains unclear if conditions will be placed on future bailouts.
Tax Justice UK has been working with the Fair Tax Mark and other organisations to get the government to attach conditions to any deals it does with businesses. The Labour Party also voiced support for similar measures.
Announcing the first bailout for Cesla Steel which operates in Cardiff, the government confirmed the company would repay its rumoured £30 million loan in full and meet a series of legally-binding conditions on preserving jobs, tackling global warming and restraints on executive pay and bonuses, as well as tax obligations.
Tax Justice UK joined other groups to write to Prime Minister [insert letter] Boris Johnson to insist that similar conditions be applied to all Project Birch bailouts and other bailouts of major companies.
An influential group of think tanks, campaigners and charities has joined Tax Justice UK in agreeing common goals to build back better in a world affected by coronavirus.
The pandemic has reminded us just how valuable the contribution of carers, nurses and key workers is to a caring society. In the long term we need to be spending more money on health, care and other areas to ensure we have a resilient society and economy. However, this cannot happen without reform of the tax system.
The UK’s approach to tax is dysfunctional: we don’t raise enough money, avoidance is rife and wealth is under-taxed. Despite progress, estimates suggest that £35 billion to £90 billion of tax goes uncollected per year.
The government also spends over £164bn a year on tax reliefs - many of which are badly targeted and largely benefit the well off and big companies. The corporate tax rate has been slashed from 28% in 2010 to the current 19%. The UK also contributes through its reliefs and loopholes to a broken international tax system, which deprives other countries of revenue.
The Covid-19 crisis shows that the government has huge financial power, flexibility and choice over how to support public spending. Our statement Tax reform to support a fairer and greener future argues that as the immediate crisis fades there will be big political debates about how to build back better. A fair tax system should underpin more investment in high quality public services and we must be ready to challenge those who are already arguing for austerity 2.0.
Tax Justice UK has developed a series of high level recommendations we believe the government should implement.
The signatories to the statement are: Tax Justice UK, New Economics Foundation, Women's Budget Group, Church Action for Tax Justice, Oxfam GB, Christian Aid, Institute for Public Policy Research, Jubilee Debt Campaign, Common Wealth, Centre for Local Economic Strategies, Positive Money, Quakers in Britain, Equality Trust, Tax Research UK, War on Want, Ethical Consumer, Taxpayers Against Poverty and We Own It.
Tax Justice UK is keen to work with other organisations who want to be part of a movement to bring about progressive tax reform and share our goals.
Download the statement here. Tax Justice UK has developed more detailed policy recommendations, which can be read here. If your organisation wants to support the statement, please get in touch - mail [at] taxjustice.uk.
Great news from Scotland and Wales where politicians have taken action to ban companies based in tax havens from getting bailouts.
This is a step forward in our campaign to ensure we bailout the workers, not tax haven billionaires.
Some companies have dodged their obligation to pay a fair share of tax in good times, only to seek bailouts when times get tough. It is right that we should protect jobs at this difficult time, but it is equally true there should be conditions to force responsible tax conduct on organisations that get support.
Westminster is well behind the curve on this issue. So Tax Justice UK has launched a petition to prompt MPs in London to get their act together on an issue of genuine concern to the public.
All governments need to go further and implement the Fair Tax Mark’s conditions for a fair tax bailout.
We want the Chancellor, Rishi Sunak, to take action and ensure that any bailouts come with conditions attached so companies pay their fair share of tax. You can sign the petition here.