In our survey of December 2019, companies ‘should pay the correct amount of tax’ came out as the highest priority for consumers, with 9 in 10 people saying they care either a lot or a fair amount. But why is this such a priority?
UK companies have little flexibility in the taxes they pay, and while thousands of businesses continuously pay their fair share, it has long been recognised that multi-nationals often utilise complex structures to divert profits to lower-tax havens and do not pay a fair share of tax in the UK.
Although around £57bn of corporation tax is collected each year, our friends at Fair Tax Mark estimate £7bn in annual revenues are not collected EVERY YEAR in the UK as a result of businesses shifting profits to low tax jurisdictions.
This is a significant % of lost revenue, although not just a UK issue. Economists at the International Monetary Fund estimate globally, $650bn is lost tax revenues every year!!!
Is the corporate tax system working?
In 2014, the UK introduced a diverted profits tax (DPT), aiming to keep more profits in the UK by rewarding companies’ good behaviour. Unsurprisingly this received push-back from many multi-national businesses and appears not to be working.
In a 2020 article from iNews reported US tech giants are still paying minimal taxes:
- Netflix – £700m sales, £0 corporation tax
- Amazon £2.4bn sales, £1.1m tax
- Ebay – £1bn sales, £10m tax
- Facebook £797m sales, £28m tax
- Apple £14bn sales, £39m tax
Data obtained by accountancy firm Fitzgerald & Law in 2019 under a Freedom of Information request, found HMRC are investigating £20bn of ‘tax under consideration’ – an estimate of the maximum potential additional tax liability in cases before HMRC has carried out a full investigation.
Why you should care
Corporation tax affects all of us – around 10% of all UK tax revenues comes from this tax on business profits. It funds our public goods and services like the NHS, education, social care, blue light, armed forces and housing. So making companies pay the correct amount of tax is fair and vital.
But more than that, it should also provide a level playing field for smaller businesses to compete with corporates and multi-nationals. And that is important. Small and medium sized businesses employs almost 17 million people in the UK (almost 2/3rds of the workforce, it’s jobs that are at stake.
Consumers want to support businesses that do the right thing, so it is no surprise that tax, or the avoidance of, is such an emotive subject. But, as the figures above demonstrate, loss of corporate tax is currently a significant cost to the country, financially, jobs and society in general.
Take Action Now!
9 in 10 of us want to live a more sustainable lifestyle, but less than 2 in 10 are actively changing our lifestyle. We need something simple, but effective.
That’s where the free Impact Score® app. comes in. It starts by showing you whether companies are behaving well or badly. Who is doing the right thing across a series of measures you have told us are important to you (paying a fair share of corporation tax being one).
Moreover, in a couple of clicks, you can tell businesses if you are happy with their performance or not. And if not, that the business needs to improve or risk losing your custom.
Your voice is important. Download the app in your mobile app store, and Make Change Happen.