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.”
Our campaign to end tax avoidance by global multinationals has now placed tax firmly on the agenda of the G7 meeting. An initial agreement to end global corporate tax dodging is within reach.
Last weekend the Labour party wrote to the Chancellor, Rishi Sunak, calling on the government to support a global deal to ensure big companies pay their fair share.
The Financial Times came out in support of the plan put forward by President Biden to have a global minimum corporation tax rate. This would help end tax avoidance by big multinational companies. It would also put pressure on tax havens.
Former Prime Minister, Gordon Brown, wrote in favour of a deal. The Daily Express and Guardian newspapers raised uncomfortable questions about why the UK is so slow to get behind the plan.
By Monday evening the UK’s position on the Biden plan was the main topic of debate in Parliament. It was great to hear MPs across the board speaking out in favour of a global deal to curb tax dodging.
On Thursday the media was reporting that tax will now be on the agenda for the G7 meeting of the world’s richest countries, hosted by the UK in mid-June. This is a real success and shows how with some smart campaigning we can make things happen.
Friday saw business leaders come out in favour of a global deal. In a joint letter, 70 prominent business figures argued that a strong deal would help tackle tax avoidance. Signatories include former senior Facebook executive Brian Boland, James Timpson, founder of key-cutters Timpsons’, Gemma McGough of Eleos Compliance and Jerry Greenfield, co-founder of Ben and Jerry’s ice cream. The letter and full list of signatories is here.
However, there’s more work to be done to ensure that the UK backs a strong agreement. The current rumours are that the G7 leaders will agree to a 15% global minimum tax rate. This is far too low and we’re calling for a minimum rate set at 25%. Any deal must also work for lower income countries as well. Our allies at the Tax Justice Network have set out what this should look like.
It's also a problem that the deal is being doing by a small group of rich and powerful countries. Global tax policy needs to be set in a much more democratic way. Tax justice campaigners are calling for the UN to take the lead, in the same way as currently happens on climate issues.
This week's news shows that campaigning can have an impact. We'll keep fighting for a fairer tax system.
The media has reported that Chancellor Rishi Sunak is blocking efforts to end tax avoidance by big multinational companies.
The US President, Joe Biden, has proposed a deal to ensure that all the biggest multinationals are required to pay at least 21% tax on their profits. According to our analysis, it could raise up to £13.5 billion a year for investment in things like the NHS or "levelling up" in the UK.
The UK government has indicated that they are willing to block the introduction of a global minimum corporate tax rate if there isn’t also a deal on taxing the tech multinationals – an international mechanism to replace the UK’s Digital Services Tax (DST).
However, as Tax Justice Network Chief Executive, Alex Cobham, said: “The UK's position simply doesn't hold water. They’re claiming that they want to make sure tech multinationals are properly taxed, while blocking the best opportunity for a generation to curb corporate tax abuse across the board.”
It’s time that the UK either gets with the international momentum for tax justice, or else comes out openly as the last big defender of tax havenry.
You can help us pressure the UK to back the Biden plan by signing and sharing our petition.
Image by: Chris Devers
A poll last year found that people are delaying having families, because the future looks insecure.
Recently the Financial Times asked young people about their hopes for the future. It’s not only “just about managing” families facing an uphill struggle. According to the FT, it’s also company directors, city traders and computer programmers too.
The thing that unites these people is that they are young and have almost no chance of earning their way to wealth.
Having a good job is no longer a guarantee of a comfortable and secure lifestyle. As the Institute for Fiscal Studies pointed out this week, inheritance is set to be a key factor driving inequalities in future years. Whether you can afford to buy a place to live is increasingly determined by whether your parents own property.
This is made worse by the tax system. At Tax Justice UK, we’ve pointed out that wealth is taxed at a lower rate than income from work. This is just one way that the truly wealthy have access to unfair tax advantages.
It’s hard to see how governments can ignore this problem forever. And as the Financial Times' economics editor has said: "the left is winning the economic battle of ideas".
All parents and grandparents want the best future for their children. Everyone deserves a fair shot at building a secure life for themselves and their kids.
As we build back from Covid we will campaign to have a tax system that works for all of us. We will make sure this is an issue that stays at the top of the list for politicians.
For a longer read on how access to wealth is key to understanding class in modern Britain take a look at this excellent essay from Christine Berry for the think tank Autonomy.
Image by Álvaro Millán
The Manchester United player Marcus Rashford is a footballing genius. He is also a formidable anti-poverty campaigner.
In many ways Rashford represents all that is glorious about the beautiful game. A local boy made good and he’s deeply committed to tackling injustice when he sees it.
He’s an example to all.
However, we learned this week that at the same time that Rashford was campaigning for free school meals, some of football's billionaire owners were plotting to create a breakaway football league. The proposed European Super League would have been a closed competition for making these billionaires even richer.
It’s yet another example of a small group of very powerful, and very wealthy, people profiting at the expense of everyone else.
Fans, politicians, and even Prince William were outraged. The new league looks unlikely to happen after the six English clubs backed away from the idea.
It probably isn't the last time we hear of plans for a super league in football. But for now at least we can take a message of hope that it is possible for popular outrage to make usually unaccountable billionaires back down.
Football has a long history of inequality and murkiness. The Tax Justice Network have investigated the offshore structures used to run the game. They found that owners can become entirely unaccountable. Questionable financial decisions have condemned century-old institutions like Rangers FC to liquidation.
The Super League was yet another example of the dangers of unequal wealth. Concentration of economic power is a bad idea. The Balanced Economy Project has been established to look into precisely this issue. As they say: "dominant firms are using raw economic and political muscle to squeeze the life out of our economies".
We need to stand up to this and demand a different way of running the economy for the benefit of all of us.