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Conservative manifesto shows UK parties moving leftwards on the economy and tax

25/11/2019

 
The Conservative manifesto, launched on Sunday, opted for a safety first approach to tax, pledging no increases in income tax, national insurance or VAT. Their plans mostly bake in the cuts to public services we’ve seen over the last decade, with only a few limited spending increases.

Almost as interesting as what’s in the document, is what didn’t make the cut. Pre-election promises to cut taxes on the wealthy and companies were dropped. Rumours about changes to inheritance tax and stamp duty also didn’t materialise.

This shows how the centre of gravity on tax and public spend is moving leftwards. The manifesto even promises to limit the “arbitrary tax advantages for the wealthiest in society”. Boris Johnson and his team clearly felt that it would be bad politics to go into an election promising lots of giveaways to the well off. 


It’s true that the big tax pledge of increasing the national insurance threshold from £8,500 to £9,500 will
mostly benefit better off families. But this change will still be sold as a broad, and limited, tax cut. 


The Conservatives have
promised reviews of both business rates and entrepreneurs relief. Our Manifesto for Tax Equality highlighted how these are not fit for purpose, so it’s welcome to see action promised. 


The manifesto also includes a number of welcome, but modest, measures to tackle tax avoidance and evasion. But unlike Labour, which is
rethinking how to tax big global companies, the Conservatives have just reiterated their pledge to introduce a relatively modest tax on digital companies.


But with an ageing population, and growing pressure on public services, future governments are going to face huge pressure to spend more, and increase taxes to help support this. Given that most people haven’t had a pay rise in over a decade, any future tax rises should focus on those who best able to pay.



Labour announces bold plan to crack down on tax avoidance

23/11/2019

 
Labour’s detailed plan to crack down on tax evasion and avoidance is welcome.

The public is fed up of endless stories about big companies or wealthy individuals paying so little in tax. Reducing tax avoidance by multinational companies is hard. Labour is taking the right approach by reforming the way in which global companies are taxed in the first place.

Labour’s Fair Tax Programme includes many of 33 policies in Tax Justice UK’s Manifesto for Tax Equality including:
  • Simplifying the taxation of multinational companies by adopting a unitary approach to curb opportunities for tax avoidance.
  • Increasing the resources available to HMRC and carrying out more targeted audits.
  • Greater transparency over the owners of trusts and companies.


All main parties are now making promises to crack down on tax avoidance, but as always the proof will be in the pudding. We will be holding politicians of all parties to account to ensure they deliver on their promises.

Campaign win! Labour will increase taxes on income from wealth

21/11/2019

 
Labour has promised to tax income from wealth at the same level as income from work in its manifesto launched today. This has been a key demand of Tax Justice UK. 

​
Taxing income from wealth at the same level as income from work would raise £14 billion a year according to the party’s costings. Labour plan to do this by taxing capital gains and dividends at the same rate as income tax. 

We’ve been campaigning hard with Oxfam and the Institute of Public Policy Research for this change and it was a key element of our manifesto for tax equality. A recent opinion poll we commissioned with YouGov found that almost 70% of the public backed the measure.

The manifesto also promises a clamp down on avoidance and evasion whilst committing to review of the bloated system of tax reliefs, an issue we highlighted in our Inheritance Tax report last summer. It also reiterates the party’s commitment to reforming how global companies are taxed.

However, Labour has pulled its punches in other areas. The party has promised to change some of the rates on inheritance tax and council tax, but it has failed to engage with the fundamental reform that is needed to bring these taxes into the 21st century. 
​

Have a look at our analysis of tax pledges from the Conservatives, Lib Dems and the Greens. 


Conservative's election tax pledge would mostly benefit the well off

20/11/2019

 
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Read our analysis of the full Conservative Party manifesto here.

Tax took centre stage this week as Boris Johnson confirmed his well trailed plan to raise the National Insurance threshold.


In an unguarded moment Mr Johnson let slip the Conservative manifesto will include a promise to raise the National Insurance tax free allowance from £8,600 to £12,500.

The Institute for Fiscal Studies estimate that such a change would cost £11bn a year and would largely benefit higher earning households. 
​

Depending on how the policy is implemented, the poorest workers could see up to 63% of the tax cut clawed back through a reduction in their Universal Credit payments.

Increasing the National Insurance threshold is a badly designed way to help those on the lowest incomes. It would be much better to reverse some of the £12bn in benefit cuts announced in 2015. 

Elsewhere there was a mixed bag of tax promises from the Greens and Liberal Democrats when their election manifestos launched.

We were pleased to see many ideas from our manifesto for tax equality picked up by the two parties. 

The Green Party promised to tax income from wealth the same as income from work, raise corporation tax to 24% and replace the increasingly unfair council tax with a land value tax, measures that reflect our priorities.

However, Tax Justice UK advisor, Richard Murphy, cautioned that the Greens’ plan for a £76 billion carbon tax would need to avoid hitting the poor hardest. 
​

The Liberal Democrats pledged to end the tax free allowance on capital gains and to raise corporation tax to 20%. Their manifesto included an oft-repeated promise to put a penny on income tax and ‘increase’ the digital services tax. It includes welcome measures to crack down to tax avoidance.

33 policies for tax equality - our manifesto

6/11/2019

 
Today, at the start of the 2019 general election, we set out 33 policies for tax justice.

After ten years of cuts to public spending, there is now widespread consensus that more investment in public services is required. In this election, all of the main political parties are committing to major increases in public spending.

We're calling on politicians to address tax inequality, curb tax avoidance and improve the administration of the tax system. We want to restore people’s sense of having a stake in the system.

Our manifesto sets out costed policies that could raise £69 billion. It also includes measures where detailed costings are unavailable which could raise significantly more.
  

The manifesto was put together with Taxwatch UK and is endorsed by the  Equality Trust, Tax Research UK, the Women’s Budget Group, Church Action on Tax Justice and Jolyon Maugham, QC. We worked with leading academics, researchers and campaigners to develop the set of proposals. 

Our manifesto urges politicians to:

Deal with tax inequality

  • Tax different types of income in the same way and scrap the current system of capital gains reliefs: £25bn a year after an initial phase-in period. 
  • Scrap the tax-free dividend allowance, rolling it into the personal allowance -  £1.3bn. 
  • Place a limit on the amounts which can be held in an ISA. 
  • Have a single rate of pension tax relief at 28% - £neutral. 
  • Limit the tax-free pension lump sum amount - £2bn a year.
  • Replace council tax with a proportional property tax, and once this has been implemented scrap Stamp Duty - £4.2bn a year.
  • Replace business rates with a land value tax on commercial property - £ neutral.
  • Turn inheritance tax into a progressive tax on lifetime gifts and limit inheritance tax reliefs - £4.8bn a year. 
  • Raise the corporation tax rate to a minimum of 24% - £12bn a year.
  • Expand the financial transaction tax to include financial derivatives and other areas of the finance trade - £6.8bn a year.​

Curb tax avoidance and evasion

  • Tax the offshore structures used by global tech giants - £8bn a year.
  • End tax breaks for private equity firms that bury companies in debt.
  • Strengthen UK controlled foreign company rules - £1bn a year.
  • Support proposals for a global minimum tax rate. 
  • Move towards a unitary system of taxing multinational corporations - £6bn a year.
  • Make online platforms responsible for collecting VAT - £1bn a year. 
  • Limit the benefits of the non-dom rule.
  • Make British sports stars pay British taxes. 
  • Investigate the possibility of introducing a US-style citizenship-based tax system. 
  • Improve disclosure of profits and taxes of smaller UK companies.
  • Compel larger companies to publish reports on a country-by-country basis.
  • Introduce improved public registers of beneficial ownership, including the beneficial ownership of trusts.
  • Ensure that the UK Overseas Territories and Crown Dependencies publish registers of beneficial ownership of companies and trusts.

​Make tax accountable

  • Dramatically scale up the number of targeted audits that HMRC carries out. 
  • Properly resource HMRC and Companies House.
  • Consider having a tax office offering free tax advice for every town with a population over 100,000. 
  • Review tax reliefs and ensure ongoing parliamentary accountability of their operation. 
  • Greater transparency of HMRC tax avoidance settlements.
  • Carry out full equality impact assessments for all tax policy changes to ensure they are progressive and fair. 
  • Commission a comprehensive tax spillover assessment of the UK tax system.
  • Regular publication of appropriate information about the tax system, including a better estimate of the tax gap. 
  • Ensure that whistleblowers are properly rewarded and protected.
  • Ensure that tax advisors and accountants are regulated.

​Download the manifesto:
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