The Chancellor, Kwasi Kwarteng MP, has today delivered an inequality budget - with sops to big business and the wealthy at a time when ordinary people are struggling.
His decision to slash the top rate of income tax from 45% to 40% while cutting national insurance will disproportionately benefit people on higher incomes at a time when many families are being forced to choose between heating and eating.
His move to reverse a planned increase of corporation tax on the profits of the biggest companies comes as BP and Shell profit off the back of a cost of living crisis.
The cuts to stamp duty will inflate an already over priced housing market, putting housing out of reach for increasing numbers of people.
Tax Justice UK Head of Advocacy, Tom Peters, said: “This banker’s budget is an insult to the millions of people facing bills that are too high to pay, having to cut back on essentials, or waiting months for a hospital appointment.
“Instead of cutting taxes for big business and those on higher incomes, this government should be closing the loopholes open to the rich and powerful to fund the public services that we all rely on.
“They should also stick to raising tax on big companies and asking those with wealth who are protected from the cost of living crisis to pay their share.”
The new Conservative government is poised to go on a tax cutting spree.
Stamp duty and national insurance will be cut, and a planned corporation tax rise is expected to be reversed, in the Chancellor’s mini-budget on Friday.
These tax cuts are both unfair and unproductive. Reversing the national insurance changes introduced just last year will disproportionately benefit wealthy households – while removing money desperately needed by the NHS and social care.
Cutting stamp duty is unlikely to do anything more than boost house prices.
While all the best evidence suggests cutting corporation tax will do little to nothing to stimulate growth.
New research from our allies at IPPR shows that despite corporation tax being cut from 30% to 19% since 2007 in the UK, levels of private sector investment have fallen to the lowest among G7 nations.
Handouts for the rich
Our essential public services like the NHS, schools and social care are crying out for more money just to stay open – cutting taxes right now would be reckless to say the least.
If the government is serious about long-term economic growth that works for everyone, they should rethink their approach to tax. This has to include taxing the amassed wealth of the super rich.
Tax is about choices. The new government will make choices on Friday that will affect us all, potentially taking our country down a dangerous path of higher inequality and lower growth. It’s not too late to take a better path.
This week we were proud to see more than 150 people attend the launch of our joint report Tax as a Tool for Racial Justice, with Decolonising Economics and the Tax Justice Network.
The figures are stark. For every £1 of wealth held by a white household in the UK, an Indian household has 90-95p; Pakistani households have around 50p, Black Caribbean households have 20p, and for Bangladeshi households it’s approximately 10p.
This massive racial wealth gap was highlighted by research done by the Runnymede Trust.
Our joint report highlights how the UK’s deeply entrenched wealth inequalities are underpinned by our tax system. You can view a copy of the report here.
Nevertheless tax is one of the single most powerful means we share in common to fix the things that are wrong in our society.
For us it’s clear that tax must also be one of the tools we use to right racial injustice too. We will do more to tease out why racial justice matters to the work we do.
We also really want the report to be a tool to support campaigners, like our friends at Decolonising Economics, so tax can be as transformative of their work, as racial justice can be of ours.
Today the new Prime Minister Liz Truss announced a huge cost of living support package estimated to be worth £150bn. It will freeze the energy bills of consumers and businesses from further rises.
It’s good that the government is stepping in to protect us from soaring energy bills. This is why we all pay our taxes, not just to provide a safety net in a crisis, but to provide the foundation of a good life in happy times and bad.
The next question must be how will it be paid for? It appears Truss plans to add the cost to government borrowing. At the same time, the new Prime Minister has ruled out asking profiteering oil and gas giants to pay more.
Our analysis shows that UK oil and gas producers are predicted to make a staggering £51 billion in excess profits over the next year. That’s nearly four times more than the £13.5bn excess profits predicted in May.
We’re calling for a 95% tax on these recording breaking profits, which would raise £44 billion a year for two years. This would go a long way to providing funds for the emergency package. Oil and gas giants need to pay their share.
As well as calling for a proper windfall tax, over the coming months we will be making the case that the ultra wealthy should pay more in tax as well. Since the start of the pandemic, the assets of the wealthy have ballooned. Now is the right time to tax wealth properly.
Correction: We have updated this blog. In our original analysis we didn’t make a clear distinction between the revenue that would be raised under the existing system of taxing North Sea oil and gas, and the additional revenue that would be raised under our proposal for a new 95% excess profits tax. We estimate that under our proposal an additional £12.5bn of revenue would be generated each year for two years. The total revenue raised is estimated to be £46 billion.
We are proud of the research we do at TJ-UK but we accept that if we do get it wrong, it is right that we hold our hands up. With thanks to Dan Neidle for spotting this error.
A 95% windfall tax on the excess profits of North Sea oil and gas companies could raise an additional £12.5 billion a year for two years, our analysis has found. This would drive overall government tax revenues from oil and gas profits up to £46bn a year, creating significant revenue to tackle the cost of living crisis.
New Prime Minister, Liz Truss MP, is poised to spend £150bn over two years freezing energy prices with speculation abounding about how the measure will be funded.
Modeling by Tax Justice UK, found that a 95% excess profits tax to be introduced instead of the government’s Energy Profits Levy, could cover a significant proportion of the cost of living package that the government is set to announce.
Tax Justice Executive Director, Robert Palmer, said: “A bigger windfall tax to clawback oil and gas excess profits is a no brainer. The Truss government should impose a 95% tax on oil and gas windfall profits. This would provide substantial funds towards any energy support package.”
“A windfall tax on oil and gas company excessive profits would ensure that these companies aren’t profiteering during these difficult times.”
The modeling is based on the £170 billion in excess profits that UK gas producers and electricity generators are predicted to make over the next two years as set out in a leaked Treasury briefing.