The prime minister Liz Truss has resigned. However the chancellor Jeremy Hunt remains in post. Hunt’s ‘Halloween budget’, which is expected to contain public spending cuts, will continue as planned on the 31 October.
There’s also a strong likelihood whoever becomes PM will continue pushing an agenda that involves big cuts to public services.
In this period of chaos it's more important than ever that we put forward a clear alternative.
Stop the cost of living crisis
The Tax Justice team and our supporters were outside Parliament yesterday, demanding more support for everyone struggling with their energy bills.
To avoid this growing cost of living catastrophe, and further spending cuts, the government must tax extreme wealth. The government must also introduce a new windfall tax on oil and gas giants' record profits.
We were there with the campaign group Fuel Poverty Action, who are calling for a free energy allowance to cover everyone’s basic needs. You can read more about the Energy for All protest here.
Thank you to those of you who came down to get involved, and Fuel Poverty Action who organised it.
We’re going to keep pushing for taxes on extreme wealth – and on the huge, record profits of big companies.
Tax is about choices. It’s unacceptable for Liz Truss’ government to put the burden of the cost of living crisis onto the shoulders of ordinary people. Many wealthy people have been sheltered from the worst aspects of this crisis, it’s right that they pay their share.
Pushing tax justice inside Parliament
While some of Tax Justice UK were outside Parliament, I was inside, hosting an event on tax with a group of MPs from across the political spectrum.
The meeting was hosted with the All-Party Parliamentary group on Responsible Taxation and the Patriotic Millionaires UK. I spoke, highlighting the urgent need to tax wealth instead of cutting public spending.
And earlier in the day, we also took part in an event hosted by Richard Burgon MP and Lord Prem Sikka on taxing wealth.
I am delighted to see that there is real momentum building behind our case for taxing wealth more inside and outside parliament. There simply isn’t a better alternative.
A string of u-turns by Chancellor Jeremy Hunt today should be the death knell for the mantra of tax cuts for big business and the wealthy.
Speaking in response to the Chancellor’s mini-budget Tax Justice UK Head of Advocacy, Tom Peters, said:
“While it’s good that the Chancellor has reversed course today, we are now standing in the wreckage of the low tax, small state ideology, with the prospect of another round of austerity 2.0 to come.
“It must be obvious by now that these same old tricks don’t work. The public are terrified of the cost of living crisis and do not want to see public services cut anymore.
“We need to tax wealth. This government could start by following Margaret Thatcher's example and align capital gains with income tax rates. It should end the inheritance tax loopholes open to the already wealthy. Finally it needs to tax the wealth of anyone with £10 million assets.”
In his statement the new Chancellor said planned cuts to National Insurance Contributions and Stamp Duty would go ahead.
However, he rowed back on a string of tax cuts announced by former Chancellor Kwasi Kwarteng MP, including a 19% cut to the basic rate of income tax rate. The decision comes after plans to cut the higher rate of income tax and plans to increase corporation tax were reaffirmed last week.
£60 billion would be cut from things like councils, benefits and social care if the government went ahead with a second round of austerity. Liz Truss’ tax cuts for the rich and big business would have directly led to massive cuts in public spending.
That’s what the think tank, the Institute for Fiscal Studies, says will happen if the Prime Minister sticks with her disastrous tax cutting budget. After nearly a decade of cuts to public services, and in the middle of this cost of living crisis, more austerity would be disastrous.
There is an alternative
Instead of more cuts, the government should be putting money into services that are creaking at the seams. Seven million people are waiting for a hospital appointment in the UK.
This should be matched by tax increases on those who can afford to pay more. Pressure is already building for the government not to cut the rate of corporation tax, but to move it in line with other rich countries.
Taxing income from wealth at the same level as income from work is a sensible reform. The government could institute a wealth tax on people with over £10 million in assets and end the inheritance tax loopholes open to the well off.
These sensible measures should be first on the list before there is any more austerity.
Inequality is bad for all of us
The wealthy have benefitted hugely in recent years, including during the pandemic.
In this interview ex-City banker Gary Stevenson puts things into perspective. Gary made millions working for Citibank and now campaigns for wealth taxation of the very rich.
He doesn’t think the rich are bad. Instead he argues that inequality is bad for all of us. We cannot keep insulating the mega wealthy whenever the economy hits a downturn.
He’s not alone. Former Conservative Party donor Gareth Quarry thinks tax cuts for the rich should not have been on the agenda in the recent botched budget. As he said "if I can’t pay more than my fair share as a rich guy, what hope is there?”
We are going to continue to push hard for a different approach to the failed ways that we have seen in the recent past.
Did you hear that? It was the sound of a huge – and wholly necessary – government u-turn on their plans to cut taxes for the rich.
On Monday the Chancellor said he was ripping-up plans to cut the 45p rate of income tax. This was less than two weeks after he’d announced it.
We’ve pointed out again and again that the hard right’s obsession with low taxes and a smaller state is not what the public wants. There is no evidence that handing more and more giveaways to the rich will deliver a stronger, fairer economy.
Winning the debate
We’ve been on TV and radio over the last week, pointing out the facts and urging the government to reverse course on tax-cuts.
Our Head of Advocacy, Tom Peters, was on the BBC this week that the government should now scrap plans to lower the corporation tax rate.
And our Executive Director, Robert Palmer, was on TalkTV pointing out where the government’s priorities lie: tax cuts for corporate profits while many ordinary families enter one of the bleakest winters in living memory. We also talked to LBC, LBC News and BBC London.
We must go further
We’ve been pushing the case for a better tax system across the media. A better tax system that works for everyone, and delivers the public services we deserve.
The Chancellor caved in to this pressure on Monday. He must now reverse his £18bn plan to cut corporation tax.
And at a time when ordinary families’ energy bills are going through the roof, the Chancellor should also increase the taxes paid by big profitable oil and gas companies.
The Chancellor should also listen to millionaires who want to pay more tax, not less.
One of the UK’s richest councils has launched a ‘war on dirty money’ to tackle suspected money laundering and the operation of opaque shell companies.
In a massive wing for our campaign with the Fair Tax Foundation, Westminster City Council announced last week it was launching a campaign against dirty money to “combat the capital’s reputation as the European centre for money laundering”.
The number of properties in Westminster registered to owners in Jersey and Russia has risen by 300% and 1,200% respectively since 2010, The Guardian reports.
Signaling their commitment to fight against dirty money, Westminster council have signed up to the Fair Tax Foundation’s Councils for Fair Tax Declaration, which we have been campaigning for since May.
Our Fair Tax Action campaign run with Fair Tax Foundation has seen 16,600 messages sent to councillors across the UK – demanding councils can take a stand against companies with links to tax havens.
You can still send a message to your councillors here.
Westminster is the 12th council to sign up as a Fair Tax council since we launched the campaign, and the third in London – home of much of the UK’s suspected money laundering – after Southwark and Richmond.
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.