Over 30 people participated in an online event on Fair Tax Councils on 27th June 2020, organised by Central England Quakers Peace Committee and Peace Hub. John Sheldon chaired the event and introduced our speakers.
Summary
David Haslam (Church Action for Tax Justice) set the tone for the session, and was able to give a theological context as well as drawing on his own deep knowledge of the figures on tax avoidance and inequality in the UK and worldwide.
Mary Patel (Fair Tax Mark) told us about practical ways in which we, as the grass roots, can make positive moves locally to encourage the fair tax mark; we appreciated her concrete suggestions for what we can do, to avoid falling into despair at the scale of the challenge.
Ravi Subramanian (UNISON West Midlands) put the issue in broader context: in particular, he highlighted the sharp understanding that UNISON members have of this matter – they can feel their take home pay and their terms and conditions worsening, and they can see what their company is doing with the tax on its profits.
Finally, Cllr Fred Grindrod (Bournville and Cotteridge Ward, Birmingham City Council) shared his deep knowledge of working with the residents in his ward; his real sense of what councils like Birmingham City can do to help shine a light on this issue was inspiring and encouraging.
Report
David Haslam (Church Action for Tax Justice) pointed out the extreme inequality in our society and asked ‘who owns England?’ In the UK the wealthiest 10% have on average £2.5 million of assets per household while the bottom 10% have almost nothing. An even starker inequality exists worldwide: collectively, less than 100 of the wealthiest people own more than the poorest 3.5 billion. In recent decades there has been a steady appropriation of wealth by a rentier class who live off dividends, rent etc. How we have become so unequal?
Tax is an area where inequality can be clearly identified, and an open tax register could help, as much tax avoidance is reliant on hiding the true ownership of corporations. HMRC and Parliament’s Treasury sub-committee are both looking at aspects of tax. HMRC is focusing on Capital Gains Tax – which is clearly unfair as the richest benefit most from capital gains, yet are taxed at just 20% whilst income tax for median earners is higher.
David gave some Christian context to the concept of tax justice, identifying a culture in the UK of viewing all tax as ‘bad’. In the Gospels, tax collectors are not popular – but we need to remember that in that context, taxes created a massive burden and bled the peasants dry. David reminded us that there is a growing Christian movement for tax justice: Pope Francis recently said that tax dodgers are the equivalent of criminals or even murderers. In the Nordic countries (which also have Christian heritage) there is a culture of civic duty and pride at paying tax for the common good – how can this be replicated in the UK?
As individuals we can encourage Councils, churches and other bodies we are part of to look at the companies they use and invest in, and ask them to sign up for Fair Tax Mark.
Mary Patel (Fair Tax Mark) explained the thinking behind the Councils for Fair Tax Declaration, which is seeking to use the power of local grassroots campaigns, in the way that Fairtrade and the Living Wage have. The Fair Tax Mark supports and celebrates responsible tax conduct (complementing the work of other organisations who highlight bad behaviour) and Mary highlighted some of the companies who are already accredited.
Mary outlined some of the problems – £7 billion pounds of potential corporation tax is lost to the UK through shifting profits offshore. £37.5 billion worth of public contracts have been awarded to tax dodging companies in the past 5 years – so local councils who spend public money on procurement have an opportunity to make a difference. Councils that sign up the Fair Tax Declaration pass a council motion, committing to:
- good tax conduct in the council’s own affairs
- demanding greater transparency of suppliers
- supporting Fair Tax Week
- certifying any council-owned businesses / subsidiaries to the Fair Tax Mark
- joining calls for reform of procurement rules.
Mary offered resources for encouraging local councils to sign up to the scheme, including a guide for councils, and template letters to councillors. These could also sent to local newspapers, though Mary advised that they would need some editing first. She also highlighted opportunities for creative action – a campaigner in Exeter had crafted signs for companies with the Fair Tax Mark to display.
Ravi Subramanian (UNISON West Midlands) informed us that UNISON has worked with faith groups in the past which has helped him to understand that there is a lot of overlap in shared concerns. He is now going to invite Fair Tax Mark to speak at a UNISON event.
UNISON members probably don’t know very much about the technical details – but those who work in the contracted-out sector know that private contractors make money by worsening the terms and conditions of staff and that they are tax dodgers. He could give dozens of examples but only focused on a few. In Ravi’s view, probably only a Labour government will deliver on systemic tax justice, but Labour cannot be excused from creating vehicles for tax-dodging through PFI (Private Finance Initiatives that fund public infrastructure). As one ironic example, in 2008 PFI funded the building of the UK Treasury’s headquarters in London. The building was owned by private investors based offshore to avoid tax, and leased back to the public.
Ravi also highlighted the role of the ‘Big Four’ accountancy companies which allow and even facilitate tax-dodging (KPMG, PwC, Deloitte, Ernst & Young). One example was the SERCO contract for electronic tagging: SERCO were committing fraud, being paid for public services they weren’t actually providing (eventually having to pay a £19 million fine). Their auditors were Deloitte who were fined £4.2 million for failing to carry out proper audit duties. In the Paradise Papers, SERCO was identified as engaging in tax avoidance,
As a final example, Ravi noted that UNISON represents many care workers – they are the Cinderella service – the care system is broken and the pandemic has highlighted this. HC1 is a care home giant within this system – they are asking to be bailed out by the government but in fact they had funnelled £50 million to the Cayman Islands in past three years.
Fred Grindrod (Labour Councillor for Bournville & Cotteridge) felt that tax justice underpins everything in public life, but is not high enough on the political agenda in the UK. In trying to recover from pandemic, the problem will be how to ensure that the main burden doesn’t fall on the most disadvantaged. Fred has no confidence in the Prime Minister’s “promise” not to go down the austerity route any further. He also fears that Brexit will facilitate tax dodging and many keen Brexiteers have a vision of Singapore-on-Thames (Singapore being a low-tax jurisdiction for multi-national corporations).
Fred highlighted that tax justice must also underpin environmental change and workers’ rights. The Labour government missed an opportunity to initiate discussion on tax but the 2019 Labour manifesto had some good policies on tax justice. Keir Starmer has pledged to promote economic justice.
Local government is also very important – in Fred’s view the relationship between local and national government is currently on verge of breakdown, with many councils on the verge of bankruptcy. The West Midlands is particularly vulnerable and Birmingham is going to be one of the worst affected cities globally.
Regarding the Councils for Fair Tax declaration, in the West Midlands Cannock Chase is already on board. Birmingham City Council (BCC) passed a motion on tax justice in 2016 – it was promoted by a Conservative councillor, and the importance of cross-party working was noted. Following this declaration, BCC has done some work on fair tax, regarding contractors used. The Birmingham Business Charter for Social Responsibility includes the living wage, sustainable and ethical procurement. However, in light of Mary’s presentation, Fred felt that BCC could and should go further. Ideas are contagious in local government, and Fred was hopeful that as more councils get on board the issue could snowball.
Discussion
Following the initial presentations there was discussion about different forms of taxation, some progressive such as corporation tax (the main focus of the Fair Tax Mark), and others regressive, such as council tax or VAT. There was also a mention of land tax as a potential alternative form of taxation. Building support for progressive taxation and creating a culture of civic duty around tax go hand-in-hand.
The second period of discussion raised questions about individual action and ethical consumption. There were questions about the effectiveness of boycotting major tax-avoiders such as Amazon – both David and Mary felt that calls for systemic change and individual actions strengthen each other, especially when coordinated. Similarly Fred felt that we need to work at all levels of government from parish councils to international bodies. There were also questions about the moral difference between individuals using a tax-free ISA and corporations avoiding tax. Mary noted that the difference is between:
- Tax-planning where individuals and companies follow the letter and spirit of the law, and governments use tax to encourage or discourage particular behaviour (e.g. ISAs encouraging savings, carbon taxes discourage fossil-fuel use).
- Tax-evasion where individuals and companies break both the letter and spirit of the law – this is illegal.
- Tax-avoidance where individuals and companies follow the letter but break the spirit of the law – exploiting loopholes to get out of taxes they should be paying. This is the focus of most tax justice campaigning.
We were reminded that whatever the letter of the law, we have a moral duty to pay our fair share and contribute to the common good according to our means.
All of the speakers noted the importance of keeping up pressure on those in power (economic and political), and building a movement of people who care about tax justice. There is a sense of injustice amongst the general population, and a desire for building community in the wake of the pandemic, but people often don’t know what to do: so spreading the word and offering simple actions is powerful. The event helped facilitate networking and connections – we hope that the links between campaigners, churches / meetings, trade unions and local government will continue to grow.