New polling by Tax Justice UK has found growing anger at tax avoidance among Conservative voters in the wake of the Pandora Papers.
The Pandora scandal revealed how the rich and powerful, including senior politicians and political donors, continue to use opaque ownership structures to buy property and reduce their tax bills.
The poll carried out by Survation for Tax Justice UK found that:
Voters as a whole, and Conservatives in particular, are fed up with the rich and powerful slashing their tax bills.
It is deeply unfair to see a small minority paying less tax at the same time that the government is raising taxes on ordinary workers.
Rishi Sunak needs to show that he understands the public anger that is out there and use the budget to signal he will close the type of loopholes revealed in the scandal.
Almost 100,000 people have signed Tax Justice UK’s petition calling on the Chancellor to enact a Bill that would crack down on avoidance in his Budget.
Tax Justice UK is calling for Rishi Sunak to close tax loopholes and invest properly in HMRC so that everyone pays their fair share. The government should finally introduce the stalled plan to shine a light on the offshore owners of UK property and beef up the powers of Companies House.
Survation carried out fieldwork via an online panel with 1,003 UK residents aged 18+ on 11 and 12th October 2021. The full results can be downloaded here.
The poll is an update on a survey carried out by Survation in June 2020.
Last week nearly 140 countries took another step towards a global tax deal that will limit the scope for big companies to dodge taxes by shifting their profits overseas.
There were some very small positive last-minute changes to the deal, which the OECD believe will raise up to £130bn globally by preventing big companies from avoiding tax.
The deal will be a landmark in the struggle for tax justice, by reigning in the largest multinationals who have for too long been able to exploit the rules to unfair advantage.
But it is not a silver bullet.
First the global minimum corporate tax rate will be too low. At 15% it will not be sufficient disincentive to prevent profit-shifting out of the UK, where the headline corporation tax rate is going up to 25%. It will not create a level-playing field for domestic businesses.
Second, despite some small improvements to the deal, the overwhelming benefit will go to the G7 countries who have led the process. The US will be the major winner. A lot more could be done to split the extra tax raised fairly across the world. Countries in the Global South should have more power over the setting of global tax rules.
Finally, it’s not clear that the deal will be better at taxing the biggest technology firms than individual digital taxes already in place in some countries - such as the UK’s digital services tax. Letting the tech giants off the hook would be a catastrophe.
We have come a long way to get to a deal, but clearly there is more work to be done. Once the dust has settled on the details though, this agreement could be the first of many, each of which take us a step closer to global tax justice.
The Pandora Papers have exposed how the rich and powerful can still slash their tax bills.
Tax Justice UK has decided it's time to act, but we need your help.
We want to whip up media pressure on the Chancellor to tackle tax avoidance in his Budget on the 27th October.
Over the last ten years a lot has been done to clean up these types of schemes. However, much more could still be done by our politicians.
Support our crowdfunder and help us put pressure on the chancellor to act.
If it chose to, our government could use its 80 seat majority in the House of Commons to clamp down on tax dodging. Politicians could lift the lid on the type of opaque offshore companies used by Cherie Blair to avoid a £300,0000 stamp duty payment for the purchase of office space.
A law creating a public register of who really owns UK property through offshore arrangements is gathering dust in parliament. The government should pass this legislation now.
Many of the professionals who enable abuse aren't regulated properly, as this report by Transparency International UK points out. There's limited enforcement when bankers, accountants and lawyers are found to have enabled wrongdoing.
Finally, as our friends at TaxWatch revealed earlier this year, you are 23 times more likely to be prosecuted for benefit fraud in the UK, than tax fraud. Yet the government has cut the number of tax inspectors working for HMRC. This is about political will.
Tax officials bring in many times the revenue that they cost. Between 2016 and 2019 HMRC carried out a third fewer tax inspections. This should change.
The Pandora Papers is hot news because it exposes lurid details about how the rich and powerful live. If politicians want to end this kind of coverage, it’s in their power to act.
Almost 100,000 people have supported our petition urging the a government clamp down on the tax loopholes used by the rich and powerful.
Sign the petition here.
Read our letter to Rishi Sunak calling for action.
When we set up Tax Justice UK back in 2017 we wanted to make progressive taxation an issue that politicians were confident to talk about.
For too long wealth taxation in particular had been a no-go area for MPs. They were often fearful of media and political backlash if they suggested taxing wealth in a smarter way.
The Labour Party conference shows how far we’ve come.
In advance of her speech, the shadow chancellor, Rachel Reeves said: “I do think that people who get their income through wealth should have to pay more”. This is something we've been calling for alongside our allies.
Reeves set out how unfair the tax system is and laid down principles for how a Labour government would deal with tax reform. She announced that Labour would scrap business rates and replace them with something “fairer”.
She also warned Amazon’s billionaire boss Jeff Bezos: “If you can afford to fly to the moon you can pay your taxes here on earth!” She committed to ensuring the digital giants pay a fair amount of tax in the UK.
It’s now clear what the shadow treasury electoral strategy is - they want to build a broad coalition with proposals that both keep the Labour membership happy, but also capture business support.
But for them to succeed there is more work to be done. The shadow chancellor did not commit to taxing income from wealth the same as income from work. And while the opposition’s course on tax issues appears to be heading in the right direction, we still haven’t heard enough detail on their plans.
Finally, I am concerned that Labour is still talking about the need to “balance the books” as a household would have to. Government finances are not the same as a household, as our colleagues at NEF have pointed out. Borrowing is still very cheap. The consensus amongst economists is that the government should be spending now to support the recovery, rather than worrying too much about the deficit.
We’ll keep pushing politicians of all stripes to commit to taxing big companies and the wealthiest. This will help support the public services we all rely on as we recover from the pandemic, and meet the challenges of climate crisis, rampant inequality and demographic change.
ASOS and Serco were among six companies across finance, outsourcing, retail, real estate, mining and pharmaceuticals who made £16 billion in excess profits during the pandemic.
Our new report “Pandemic Profits: who’s cashing in during covid” shows that a number of companies saw their global profits leap during the last 18 months. The profits of one company, the Scottish Mortgage Investment Trust, were up 801% compared to previous years.
The report argues that these companies are examples of a broader trend where some companies benefited from government pandemic spending, while others were well placed to profit from economic changes that have been accelerated by covid.
The covid pandemic has been unprecedented in its impact. Not only did it cause a recession that saw the wealthiest grow richer, whilst others struggled, it also resulted in some companies making what appear to be unprecedented profits.
The report argues in favour of a tax system that supports a fair recovery and keeps up with the economic changes accelerated by the pandemic.
Those who have suffered over the last 18 months should not be asked to pay more, however, it is fair to expect those who have prospered to contribute more to the economic recovery.
The report recommends that the Chancellor:
You can read the report here.
The government will raise National Insurance by 2.5% and announced a similar increase to the way dividends are taxed to help fund social care.
Investment in the care system is long overdue but the majority of funding in this announcement will go to the NHS. Nor does the policy go far enough, according to plans set out by the Women’s Budget Group.
Tax Justice UK Head of Advocacy, Tom Peters, said: “Tackling the crisis in social care is long overdue, but the proposed reforms don’t go far enough, and National Insurance is an unfair way to fund investment in the care system.
“After a pandemic that saw the wealthiest become even richer, those with the broadest shoulders should be first in line to take the strain as we start to build back.
“That means tax reforms including equalising capital gains with income tax, abolishing tax loopholes and ensuring companies pay their fair share of tax should also be on the table if we are to create the best possible social care service for all."
The pandemic has forced a rethink about our public services.
So I was pleased to hear a sense of urgency from the government about the need to tackle the social care crisis. This is an issue many politicians have ducked away from.
There was a crisis of care before covid. This affects all of us. Social care is something any of us might need at any point in life.
Newspaper leaks suggest that the Prime Minister is looking to increase National Insurance to pay for more money for the NHS and social care.
This move would be deeply unfair. Increasing National Insurance would hit younger people and lower earners. Pensioners and people earning income from their wealth don’t pay National Insurance.
It's no wonder that a poll by YouGov found a striking generational split in terms of support for the National Insurance hike. Younger people were far less likely to back the plan. The announcement is now on hold until after the summer holidays.
At Tax Justice UK we see this as an opportunity.
The government should be asking the wealthy to pay more in tax to support our care system. This is especially true as the richest people in the UK have seen their wealth balloon during the pandemic.
There are a range of tax reforms the government could bring in to fund social care. Ending tax loopholes, a one off wealth tax or aligning capital gains tax with income tax would all raise billions of pounds.
The government has a choice. It can increase taxes on hardworking families and the young. Alternatively it can use this as an opportunity to ensure the wealthy are taxed properly.
Our friends at the Women's Budget Group have put forward some concrete ideas for how to make sure we build the social care system that we all deserve.
The world's biggest economies have backed a global minimum corporation tax. G20 finance ministers from countries like China, Brazil, the US and the UK signed up to the deal.
This builds on the agreement reached at the G7 summit in Cornwall in June. It's difficult to overstate just how important this is.
Campaigners around the world have pushed to fix the current system for decades. At the moment some of the biggest companies in the world get away with paying ultra-low rates of tax. The deal would start to fix this problem.
However, the deal doesn't do much for lower income countries. It's notable that countries like India and Argentina are critical of it. Campaigners are angry that most of the extra money will go to the richest countries.
The agreement came last week, during the same week that the UK government voted to reduce the amount of foreign it gives. The middle of a global health and economic crisis is not the time to be cutting lower income countries off.
It's unfair that politicians are cutting aid with one hand while barring lower income countries from their fair share of tax with the other. It should be in our own interests to help poorer countries fight the pandemic. It's also the right thing to do.
Last week the Climate Change Committee warned that time is running out for realistic commitments to tackle the climate crisis. The Committee highlighted that this defining year for the UK’s climate credentials as the UK government hosts the UN Climate Change Conference (COP 26) has been marred by uncertainty and delay. With every month of inaction, it is harder for the UK to get on track, the committee warned.
Adding to these concerns is that the crucial net zero review by the Treasury has also been delayed. The review will assess how the UK can manage the transition to a low carbon economy.
The Chancellor should look urgently at the role that tax reform can play in a green and fair transition. The tax system can incentivise environmental goods, reduce emissions intensive and other environmentally destructive activities, encourage people and businesses to make the most of emerging low carbon opportunities and raise funds to support government action.
Together with a range of partners from the Green Alliance to Greenpeace and Oxfam we have set out principles for how the UK government should reform the tax system to help steer our economy to a fair net zero carbon future.
The principles stress the importance of aligning taxes to support climate and environmental goals, taxing fairly and ensuring effectiveness. It’s crucial that the tax system should be progressive overall, focusing on those with the greatest ability to pay and with the greatest responsibility for climate and other environmental damage. This will ensure that any changes are popular.
You can read the full set of principles here.
It is also important to stress that there are limitations, too. Tax reform will not be a complete solution and must be accompanied by other policies, such as regulation and increased public and private investment.
For ideas and suggestions what more needs to happen watch our webinar ‘Climate and Tax Justice: Time to act?’, which was chaired by Caroline Lucas MP and featured a range of speakers including entrepreneur and millionaire Gemma McGough and many others. Watch the recording here.
Image: Markus Spiske
In response to news that G7 finance ministers have reached a deal on setting a global minimum corporation tax rate of at least 15%.
Tax Justice UK Executive Director, Robert Palmer, said: “A global minimum tax rate of at least 15% is a good first step. This would make it harder for big companies to dodge their taxes.
“But setting the rate at 15% is far too low, especially compared to the fact that the UK’s rate is going up to 25% in 2023. This deal won’t do enough for British businesses who are trying to compete with global giants who pay ultra-low levels of tax.
“This deal must be a starting point for a future agreement that includes a higher minimum tax rate and one that works for lower income countries too.These G7 negotiations have excluded most of countries in the world - we need a fairer way of setting global tax policy.”