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.
New analysis suggests that the UK would raise an extra £13.5 billion a year from a global minimum corporate tax rate set at 20%. This would rise to over £22 billion a year if the rate was set at 25%. Companies like Amazon, Apple, Facebook and Google could face significantly higher tax bills.
President Joe Biden has proposed a sweeping overhaul of how big international companies are taxed. This includes a new minimum tax rate which would help crack down on corporate tax avoidance.
The public is fed up with major companies getting away with paying ultra low rates of tax. A new minimum corporate tax rate would bring in billions of pounds to support public services and would deal a blow to tax dodging. As we build back from covid we should ask big business to contribute more given the support they’ve had during the pandemic.
The Biden administration has suggested a global minimum corporate tax rate of 21%. The Independent Commission for the Reform of International Corporate Taxation has proposed a minimum rate of 25%. Rishi Sunak has pledged to increase the UK’s corporate tax rate to 25% in 2023.
So far the UK government has been silent on whether it backs the US corporate tax reform plan.
The government should stand up and support these proposals. The UK and its tax haven network have long promoted a global race to the bottom on corporate taxes - this needs to end.
A new minimum corporate tax rate would have a big impact on places like Ireland, the Netherlands and the Cayman Islands which have ultra-low corporate tax rates. The plan comes as international negotiations on global tax reform at the OECD club of rich nations gather momentum.
The analysis is contained in a soon to be published paper by international tax experts on how to implement a global minimum effective tax rate (METR) for multinational companies. The paper breaks down the expected revenue for a number of countries for different minimum tax rates based on a methodology from the OECD club of rich nations.
The METR proposal is authored by Sol Picciotto, Jeffery M. Kadet, Alex Cobham, Tommaso Faccio, Javier Garcia-Bernardo, and Petr Janský. In advance of the forthcoming study, details of the proposal are available here.
The UK’s 54 billionaires saw their wealth increase by £40 billion during the pandemic, an increase of 36%.
At the same time, the number of people who needed some form of social security jumped 98% to six million people.
Barely a day passes without fresh evidence of how this pandemic has been soft on the super-rich and hard on those on lower incomes. This is making the inequality crisis in our country even worse.
However, there are dissenting voices among the wealthy who want to see this change. Last weekend the Guardian magazine told the story of a global group of millionaires who are campaigning for higher taxes on the rich. They include Abigail Disney, granddaughter of one of the founders of the Walt Disney Company and the UK’s Gemma McGough.
She told the paper: “The economy is so damaged from Covid, I am happy to pay my share. If you’re making more than £150,000 or £200,000 a year, you should be paying more. If you’re earning £200,000, paying a higher rate of tax on earnings above that is not going to make you poor, is it?”
Wealth in the UK is woefully undertaxed compared to income and Covid has made inequality worse.
As we build back better, it’s clear that profitable companies and those with substantial wealth need to pay their fair share.
Tax Justice UK is working with Gemma and others, to make sure this happens.