Robert Palmers Speech
Hello, thank you for inviting me to speak.
As Annelise said I’m the Executive Director of Tax Justice UK. We’re a campaigning organisation that wants to get to a point where everyone in the UK benefits from a fair and effective tax system.
As Ozlem has just discussed, our public services are starved of resources and we seriously need investment to kick start growth. This situation is intimately bound up in how the government raises money.
In our tax system, the burden falls heavily on those who are the least able to pay. The poorest 10% of the households already pay on 42% of their income in various forms of taxes compared to the richest 10% who pay on average 34%.
I think it’s helpful to talk a bit about how we got here.
There has been a shift in emphasis over the last 50 years from taxing capital and wealth towards taxing individuals and consumption. This has happened in line with a shift in orthodox economic thinking away from the post-war consensus where the state played a key role towards a narrative of a smaller state and low taxes.
The broad political view since the 80s - certainly in the centre - is that tax rises are bad. A clear example of this is corporation tax. In 1965 it was introduced at 60%. By the time we got to 1997 and the last Labour government this had halved to 31%. The current government has dropped it to 19% and plans to cut it even further to 17%. What is strange is that even businesses aren’t calling for this. For example the head of tax at the accountancy firm Deloitte has said publicly that nobody wants corporation tax to fall to these levels.
This approach to tax is driven by the idea that we have to compete with other countries on our tax levels. Earlier this week I met with a former Dutch MP who said that his government was planning to scrap a particular to match a similar move by the UK.
I don’t think this is a sensible approach to tax. It certainly won’t provide the resources we need to fund public services and it will just lead to a race to the bottom.
However, I think we’re starting to see shift in public perception around the tax system. For example, a recent poll of 20,000 people found broad support for 1p rise in national insurance to fund the NHS.
We have now had 8 years of austerity. We have starved public services. Many people have not had a pay rise. The benefits of the lukewarm economic growth we’ve seen have gone to the wealthiest. There is a growing sense we may need to raise more money.
This is combined with the anger around the fact that the wealthiest and companies not been seen to pay their fair share. My organisation owes a debt to the work of UK Uncut, Tax Justice Network, newspapers for their campaigning to get this issue on the agenda.
Labour party has also put the issue of tax on the agenda in a really positive way.
But we should also recognise the work the Conservatives have done. In 2013 during the same Davos conference during which he announced the Brexit referendum, David Cameron argued that big companies had to wake up and smell the coffee and start paying their fair share.
Last week, we had a senior Conservative argue for tax rises. Theresa May’s former deputy Damien Green proposed tax rises to cover the cost of looking after the elderly.
Change is in the air.
As I said at the beginning my organisation’s mission is for ensure that everyone in Britain benefits from a fair and effective tax system.
So what does this look like?
There are two parts.
We want a tax system that is fairer - currently too great a burden is placed on those who struggle to pay, and too little on those who don’t.
We also want a tax system that is effective - at the moment the system doesn’t do the things that it is designed to do well.
So what does that mean in practice?
For a fairer approach to tax we should have a grown up conversation about who’s paying what and how. Options for change could include:
- Higher corporation taxes, as Labour has proposed. Or at the very least not cutting it even further.
- A review of business rates - it seems crazy that we’re taxing businesses on the basis of whether they have a physical presence somewhere, rather than on how much money they’re making.
- Work out how we tax the gig economy fairly to reflect the fact that vast swathes of people are in really precarious jobs.
There are also loopholes that make the system far from effective. The UK government should consider:
- Cracking down on tax avoidance schemes.
- Properly resource HMRC.
- Ensuring that there’s more openness about how we make tax policy.
These are just some areas where we could make progress.
We're a new organisation and we are working with experts in the UK and globally to gather the best policies available. TJUK will be a resource for anyone who wants to create a better tax system. We will set out a clear vision of what a fair and effective UK tax system could look like.
We need to reframe the public thinking on tax so that it is something that people are proud to pay.
We have to make sure that people feel that they get good value for money through excellent public services.
This is something that more and more people support.
Ultimately we want politicians and others making the positive case for the role that tax can play in society.