2015 marks a historic moment in British history - the point at which the debt created from bailing-out slave owners during the abolition of slavery was completely paid off by the tax payer. That's 180 years in which residents in Britain have been paying into the pockets of those who benefitted from the slave trade and continued to benefit from the compensation scheme that succeeded it. Naomi Fowler, at our sibling organisation Tax Justice Network, has done an incredible job at delving into this shocking fact. As is becoming more well known, this country’s wealth was in large part built on slave labour and colonial exploitation.
This isn’t just about the past. Those deep economic inequalities persist between white and Black, Asian and minority ethnic (BAME) households today. According to the Runnymede Trust, for every £1 owned by a white person in the UK, households of Indian descent have 90–95p, of Pakistani descent have around 50p, of Black Caribbean descent around 20p. Those of Black African descent and of Bangladeshi descent have a measly 10p. This matters. Wealth and income are what determine our security, leading to better health outcomes and a longer life.
The sad truth is that our tax system was built in a way that props up wealth inequality, and so is a driver of racial injustice. The huge disparity of wealth between white and BAME communities is entrenched by the UK approach to tax, which favours the wealthy, including white families whose wealth originates in slavery and empire.
Fair taxation is one of the building blocks of our communities, in part because it supports investment in public infrastructure and services that we all rely on. Over the last ten years the political decision to shrink the deficit by cutting services, rather than raising taxes, has had a devastating impact, with BAME women being hit the hardest of any group.
Academics in the US have done a great job at understanding the links between the tax system and racial inequality. Last month, Brakeyshia R. Samms, a self-described “Unapologetic Fiscal Policy Wonk," set out on Twitter a long list of American research on this dynamic. American academics have undermined the idea that the tax system is somehow neutral on racism and put forward concrete suggestions for reform.
In the UK we are much further behind, so the full picture is much harder to see as there is an almost total lack of research on the racialised dynamics of the tax system.
It’s not just how the system is set up and operates, it’s also about those within the system. As with many industries, there is still an unacceptable level of discrimination within the tax profession. In an article in International Tax Review, one senior international tax manager is quoted as saying: “There were three or four black people within the transaction tax group and we were never promoted. Eventually we left the Big Four [the leading global accounting firms] because we were never ever getting promoted”.
The Black Lives Matter protests around the world have brought much needed attention to structural racism and racial inequality. It’s important now for all those working on the economic system to ensure racial justice is a key part of our work. Politicians who would usually ignore the issue are taking notice, and so this is an opportunity to take forward our collective vision for economic justice.
At Tax Justice UK, we’re campaigning for higher taxes on wealth to support more investment in public services and tackle historic inequalities. We want to create a fairer, and more equal, world, that lifts everyone up. We reject the notion that the raising and allocating of government resources places any groupings in conflict with each other. This is because structural inequalities intersect so that, for example, justice for black and minority ethnic people cannot exist without justice for disabled black and minority ethnic people, and justice for women cannot exist without justice for trans women.
This isn’t just about which campaigns we run, it’s also about leadership. The mainstream tax justice movement in this country is very white, male and middle class. This has to change. We need to recognize the historic work on economic justice that has been led by communities of colour, and build our campaigns alongside them. We definitely don’t have all the answers, and we know that we have to listen and reflect more, as well as work harder to incorporate racial justice into our approach in a way that is rooted in accountable practices with these communities.
A first step is to understand what research is happening in the UK on the links between the tax system and race and what questions need to be explored further. We’re hoping to work with Tax Justice Network and Decolonising Economics on this.
Ultimately we won’t be able to achieve the world we want, with high quality public services, economic and social justice, without dramatically changing the way in which the tax system perpetuates racism.
We want to thank Guppi Bola from Decolonising Economics and Naomi Fowler from Tax Justice Network for their contributions to this blog.
Image credit: James Broad
The government is proposing to introduce a number of freeports around the UK. While there has been limited information provided on the specifics, the proposal is to have zones with lower taxes and regulatory standards. Tax Justice UK is deeply concerned that this would create micro tax havens dotted across the British countryside and fail to spur any new economic development.
Read our full response to the government's consultation. This response was supported by War on Want and the Women's Budget Group.
This blog originally appeared at the CLASS think tank.
Today Rishi Sunak announced a £30bn package to support jobs. This is on top of £160bn in spending already announced to deal with the crisis.
In usual circumstances this would be a lot of money, especially from a Conservative chancellor. But many have already questioned whether it’s enough given the scale of the economic turbulence we’re facing. The Labour shadow chancellor Anneliese Dodds dismissed it as “barely touching the sides”.
As well as more spending, Sunak revealed £8bn of tax cuts. Firstly, he has cut stamp duty on houses worth less than £500,000 until next March. This is an expensive policy, coming in at £3.8bn. The main result is likely to be higher house prices, as opposed to helping people get on the property ladder or doing anything for renters. It appears that the cut is structured in such a way that property investors and those buying second homes will also benefit. Shelter estimates that up to 230,000 people face eviction when the Covid-19 ban on evictions is lifted in August. Stamp duty is a bad tax, but this cut does very little to solve the broader problems with the housing market.
Secondly, the chancellor has cut VAT from 20% to 5% for six months for the hospitality sector. The impact of this is more nuanced. It’s likely to put more cash in the pockets of hard hit businesses who are struggling and have spent money on making their premises suitable for social distancing. This is good.
However, the big barrier to recovery for cafes, restaurants and hotels is people holding back from spending because of fear of catching coronavirus. While infections are still relatively high, and a second wave is possible, it’s hard to see things returning to normal.
Today demonstrated that there is a new consensus emerging in favour of higher government spending. The Prime Minister has repeatedly claimed that “austerity is over”. We must hold him to this promise. This means we’ll need a public conversation about how to support a bigger state. As Anneliese Dodds pointed out in her response to the budget announcements, tax rises in a recession are a bad idea as they dampen demand.
But in the long run, higher taxes are on the cards. As I argued in the Huffington Post this morning, politicians should look to taxing wealth as part of the solution. In the UK, wealth inequality is double that of income inequality, and we under-tax wealth. That’s why Tax Justice UK, along with 16 other organisations, are calling for ambitious tax reform to support a fairer and greener future.
Conditions on tax conduct, protecting jobs, global warming, executive pay and dividends have been revealed in the first “Project Birch” bailout of a company affected by the economic consequences of the coronavirus.
However, the government’s welcome move comes despite a lack of similar strings being attached to loans given through the Bank of England’s coronavirus corporate finance facility. It remains unclear if conditions will be placed on future bailouts.
Tax Justice UK has been working with the Fair Tax Mark and other organisations to get the government to attach conditions to any deals it does with businesses. The Labour Party also voiced support for similar measures.
Announcing the first bailout for Cesla Steel which operates in Cardiff, the government confirmed the company would repay its rumoured £30 million loan in full and meet a series of legally-binding conditions on preserving jobs, tackling global warming and restraints on executive pay and bonuses, as well as tax obligations.
Tax Justice UK joined other groups to write to Prime Minister [insert letter] Boris Johnson to insist that similar conditions be applied to all Project Birch bailouts and other bailouts of major companies.