We need to tackle tax avoidance
The British Virgin Islands – dubbed a ‘financial secrecy hub’ by our international partners Tax Justice Network – was this week listed as “non-cooperative” on tax matters by the European Union.
Many will argue that it’s fair enough to list the British Virgin Islands as a place that helps the wealthy and powerful to avoid tax.
When people think of tax havens they often think exclusively of idyllic Caribbean islands. But this isn’t the whole story.
There is a conspicuous absence of any European countries from the EU list of countries that are “non-cooperative” on tax issues.
Tax Justice Network (TJN) have highlighted the EU’s own “axis of tax avoidance”: Switzerland, Luxembourg and the Netherlands. These countries help big companies slash their tax bills.
TJN also estimate that EU member states are losing over $17 billion in corporate tax a year from US firms abusing the law.
We’ve been campaigning for years for concerted global action against this sort of behaviour. Only once we close loopholes across the world will tax avoiders have nowhere to turn.
The UK itself is also a major hub for dirty money. With our allies, we won a big victory in this campaign for transparency two weeks ago when the UK property register finally went live. It forces overseas individuals to reveal themselves as the true owners of UK property, an asset which was often a vehicle for money laundering in the past.
This is a good example of how campaigning can work. We teamed up with anti-corruption groups, MPs from the Conservatives and Labour, as well as a number of investigative journalists to push the government to act.
Council tax debate
Council tax is set to rise by as much as five per cent in most local authorities this year. This could be ruinous for many households with already stretched finances.
And beyond this, council tax is simply unfair. Poorer households pay a much higher proportion of their income in council tax than do richer households. Someone living in a mansion in Westminster might be paying less council tax than someone in a two up, two down in the north of England. This is partly due to outdated council tax bands that haven’t been updated since the 1990s.
Council tax is necessary and useful – an increasing proportion of the money raised by local authorities pays for services like children and adult social care – but it must be reformed so richer households pay more.
I spoke to the Big Issue and appeared on Talk TV and GBNews this week to discuss the crisis in local authority spending and the difficulties that rising levels of council tax place on poorer families.
We support the cross-party Fairer Share campaign for a reformed approach to council tax that would see 3 in 4 people pay less.
Liz Truss is back! And if the media coverage from the last few days is any guide, she’s keen for the Conservatives to get back to cutting taxes for the rich…. Again.
One line in particular in her essay for The Sunday Telegraph caught my eye. In the piece she claimed that her programme of tax cuts for the wealthy was popular.
It’s hard to believe it was only a few months ago that her government collapsed in the wake of a disastrous mini-budget that saw the 45p rate of tax for higher earners abolished.
Yet it looks like Truss and her allies are gearing up again to make tax a big issue ahead of the Budget on 15 March.
Rest assured we will continue to call for reformed taxes on wealth, not a repeat of Truss’s tax cuts for the super rich.
Biden agrees with us
We are not the only ones calling for higher taxes on wealth. Over the pond the US President, Joe Biden, used his annual State of the Nation address to call out growing inequality.
In his speech he talked about making the “wealthiest and the biggest corporations finally begin to pay their fair share.”
And where the US goes, the UK often follows. We showed this in 2021 when we aligned with the Biden-led call for countries to adopt a global minimum corporation tax for big companies.
The UK really didn’t want to follow suit, but we campaigned and won the argument at the G7.
Who knows, perhaps we will hear UK politicians copying the rhetoric of Joe Biden here soon.
Shell profits double to £32 billion
Energy giant Shell has posted record profits of £32 billion, the highest in the company’s 115 year history.
These obscene profits, double what they posted last year, are largely down to soaring oil and gas prices following the Russian invasion of Ukraine.
The profits will boost the bank accounts of Shell's shareholders – Shell handed out £21 billion to shareholders in 2022 – while families across the UK struggle to pay their energy bills.
Last year we helped push the government to introduce a windfall tax on oil and gas companies. But it didn’t go far enough then and it doesn’t now.
The government must increase the rate of the windfall tax and claw back more of these profits. They must close loopholes used by oil and gas companies to reduce the tax they pay.
And, as our friends at the IPPR and Common Wealth think tanks have said, the government should tax shareholder returns at a much greater rate.
Former Chancellor Nadhim Zahawi was finally sacked on Sunday over his tax affairs. He was found to have breached the Ministerial Code.
This is a victory for tax campaigners. Those in public office must have the highest standards when it comes to their own personal tax affairs.
An ongoing problem is that HMRC is under-resourced. As I mentioned in last week’s newsletter, this may have led to them failing to collect billions of pounds of tax owed.
There is a broader problem - many super rich people will use any and all means to avoid paying tax, as I wrote in a comment piece for The Guardian last week. HMRC needs the tools necessary to investigate them.
We will continue to campaign for HMRC to be given more resources, so they can properly enforce our tax laws – and scrutinise the tax affairs of the rich and powerful.
Illicit offshore wealth exposed
Now for some good news. Owners of UK property will no longer be able to hide their identities behind overseas shell companies – long a tactic used to conceal what is estimated to be £100bn of illicit financing flowing through the UK.
A new property register forces everyone who owns a UK property through an offshore shell company to come forward and identify themselves publicly. The deadline for registering was Tuesday.
Unfortunately up to 13,000 offshore companies failed to meet the deadline. But many did, and thousands of offshore owners have been identified for the first time on the register.
This transparency will make it much easier for our tax authorities, journalists and campaigners to track the wealth of the mega rich.
The register was established as part of the Economic Crime Act, which we tirelessly campaigned for, alongside our allies. You helped push this over the line, with almost 120,000 signing our petition.