Business and the wealthy pocketed £40bn in tax cuts under Johnson, while working people pay for pandemic recovery.

Analysis by Tax Justice UK has highlighted how nearly £40bn was paid to business and the wealthy in tax cuts under Johnson, over the two and a half years up to his resignation, while taxes increased on working people. 

​A review of tax “winners and losers” across every Budget that took place while Boris Johnson and Rishi Sunak were in Downing Street finds that the Conservative government had given at least £35.8bn to businesses in tax cuts, and £2.2bn to the wealthy, before they both resigned last month. 

To date working people have contributed billions to the post-pandemic recovery, through freezes to Income Tax bands and the government’s National Insurance increase. Yet the mantra of Conservative candidates is that business should receive another bung of public money through further tax cuts. 

Tax Justice UK Acting Executive Director, Paul Hebden, said: “Tax is about political choices, and our analysis shows that Boris Johnson and Rishi Sunak gave tens of billions in handouts to business.

“The idea among some of the Conservative leadership candidates that the planned 2023 corporation tax increase should be reversed is perverse given that working people are currently the only ones on the hook for the costs of covid recovery.”


Notes:

Tax Justice UK has calculated all of the policy changes implemented from the Budget in March 2020 until the Prime Minister and Chancellor’s resignation at the end of June 2022. 

Using HMT Policy Costings we have estimated the amount of public funding actually distributed between four economic categories - personal, business, wealth and consumption - within this period through tax cuts, social security or spending. 

For the full figures please see here.  

The Office of National Statistics Wealth and Assets Survey recently found that “The wealthiest 10% of households held 43% of all the wealth in Great Britain in the latest period; in comparison the bottom 50% held only 9%.” 

The UK government has finally pledged to expose how much money is lost through overseas tax evasion. 

A huge £570bn is thought to be held by UK residents in tax havens, according to media reports.

HMRC faced criticism earlier this year after admitting they’d not attempted to estimate the extent of tax evasion by UK residents overseas.

The publication of the tax evasion figure – scheduled for next year – will be a big step in the right direction.

Once we know the extent of the revenue lost, we’ll have the ammunition to push for stricter rules and enforcement.

We need a fair tax system to support our public services, so that everyone benefits. Why should the super rich be allowed to stash their wealth abroad without paying their fair share? 

We also need to make sure that HMRC is properly resourced to go after the money lost to tax havens.

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The Prime Minister, Boris Johnson, announced his resignation today and vowed to use his last days in office to reverse the corporation tax rise planned for next year.

Speaking to the Times yesterday our acting Executive Director, Paul Hebden, argued that tax is about political choices. Businesses have already had a £25bn tax relief handout this year, without paying a penny more in corporation tax. 

Meanwhile millions of households have been asked to contribute more income tax and national insurance to pay for the pandemic. During covid the wealthy saw their riches soar, yet that wealth remains undertaxed.

​It’s unthinkable that a new Prime Minister would let big business and the wealthy off their contribution to our recovery, during a cost of living crisis driven by runaway profits.

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Fair tax councils win

Away from the topsy turvy world of Westminster, we have some good news to tell you about.

Preston Council has just signed up to the Councils for Fair Tax Declaration. This follows the 14,500 messages you sent to councillors across the UK.

Preston voted unanimously to encourage fair tax practices amongst their supplier businesses. They are also calling for greater powers to exclude companies with links to tax havens when buying goods and services.

This is a huge win for our campaign. And other councils are following. Southwark Council in London is expected to pass a Fair Tax Declaration motion next week.

Regardless of what's happening at Westminster, it’s great to see the cause of tax justice winning at a local level. 

Thank you if you’ve messaged your councillors – it’s making a real difference. You can still send them a message here if you haven’t already.


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The 2021 population census out this week found that, as a nation, we are both having fewer kids and are starting to see shorter life expectancy.

Average male life expectancy in thirty years could be 82.2 years, down from 84.1 years on 2014 projections. While female life expectancy could fall too, to 85.3 from 86.9 years.

Similarly, the data showed the UK birth rate is also dropping. Couples are predicted to be having 1.56 births for every woman, down from a 1.89 estimate in 2014.

Fewer school-age children means fewer schools will be needed, the FT’s Chris Giles pointed out. We’d still need to find an extra £35 billion a year in tax, but the new census population predictions mean this sum is far less than expected.

A dropping birth rate and life expectancy obviously have implications far beyond the budget deficit, however.


Austerity effect

The data raises important questions. For example, has 12 years of austerity pushed down life expectancy?
Research from the IPPR in 2019 estimated that austerity has led to 130,000 preventable deaths in the UK since 2012.

And is the falling birth rate a sign that younger people are putting off having children due to precarity and money problems? Research in 2021 suggested this might be the case.

Tax is about political choices. The new ONS figures might give us a glimpse of the effect of those choices.

If we want to live in a country where life chances for everyone improve over time, we need a tax system that reverses burgeoning wealth inequality – and funds the best possible public services.

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People across the country are facing a worsening cost-of-living crisis, yet the profits of some of the UK’s biggest companies are surging.

Profits’ were up 34 per cent at the end of 2021 compared to pre pandemic levels for the UK’s largest non-financial companies.

Research by the IPPR and Common Wealth argues profit restraint is needed to curb inflation. They recommend a global windfall tax that could raise as much as £10 billion. 

Our Pandemic Profits research last year argued in favour of a similar tax on excess profits made during the covid pandemic. 

Price gouging?

Why are some companies’ profits surging while an increasing number of people are facing a cost of living crisis? Research out this week from Unite argues the two might be linked.

The trade union has accused companies of driving inflation higher by engaging in “price gouging”. This is where businesses hike their prices far above supply costs – applying unnecessary financial pressure on consumers.

At a time when workers are being asked to curb their calls for pay rises, this research shows that the real problem may sit with companies profiteering from a crisis.

Today we're launching a new campaign  – and we need your help.

Have you ever wondered how much your local council is paying to companies with links to tax havens?

Research by The Fair Tax Foundation found that £37.5bn of public contracts were won by companies with links to tax havens between 2014 – 19 alone.

And although the UK Government has closed many tax avoidance loopholes in recent years, an estimated £17bn of corporation tax receipts are still going astray as a result of profit-shifting alone. This is where multinational firms exploit gaps in tax rules to move profits to low or no-tax locations.

This must end.

We're demanding councils sign-up to a fair tax standard, so that no money goes to companies associated with tax havens.

Ask your council to stop buying services from tax dodging companies. It only takes 1 minute:

Local authorities can play a key role in addressing tax dodging companies.​​ Some councils have already signed-up, but the vast majority have not.

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HMRC admitted this week they have no idea how much revenue is being lost to overseas tax havens.

In a freedom of information (FOI) response, the tax authority said they didn’t know – and hadn't attempted to calculate – how much tax is being evaded by UK residents funnelling their wealth offshore.

At the same time new figures shine a light on the scale of the problem: £570bn is held by UK residents in financial accounts in tax havens.

Dereliction of duty

HRMC have all the data they need to investigate the legality of this £570bn of UK wealth sitting in tax havens, so why aren't they?

Alex Cobhan at Tax Justice Network called the situation “an outright dereliction of duty” by HMRC. Other tax experts suggested it highlights resourcing constraints at HMRC.
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We need a properly funded UK tax authority with the teeth – and political will – to investigate tax evasion and enforce the law.

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