Baroness Sanderson of Welton
Main Page: Baroness Sanderson of Welton (Conservative - Life peer)Tax: Church Action for Tax Justice Reports
Baroness Sanderson of Welton Excerpts(3 years, 10 months ago)
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Lord McKenzie of Luton (Lab) [V]
My Lords, we are asked to join a big conversation on tax, focusing on the unfairness of much of our current system. We have heard about some of that, including some of the international dimensions. Our starting point at this juncture is that taxation is, or should be, about a common good—not a necessary evil. Judgments about fairness are not just about tax rates; they are about accessibility of the benefits in the tax system and for whom they were designed. The Low Incomes Tax Reform Group has just published its practical steps, which note that tax and associated social security systems could be made to work better for those on low incomes.
The church reports are right to identify as unfair the benefits for those who can, depending on the circumstances, organise their income in such a way as to take advantage of a capital gains regime or, indeed, a more favourable income regime, with deferral in appropriate circumstances. In introducing this debate, the right reverend Prelate focused on council tax, and I agree entirely about the nature of its unfairness. I wonder whether the hangover from the poll tax is an inhibiting factor in addressing it more rigorously.
Inheritance tax has become virtually voluntary. At a time when the national finances have been laid bare by the pandemic, with an expected deficit of something like £400 billion, surely it is time to consider a wealth tax, about which we have now heard from the Wealth Tax Commission, the governing body.
The Tax Justice Network Briefing describes circumstances in which, through technicalities, taxpayers are able to minimise and lower taxation charges that operate internationally and in overseas jurisdictions. It is suggested that the benefits of doing so could amount to something like $500 billion, although that seems a somewhat simplistic figure. This can involve the use, as described, of tax haven jurisdictions, taking advantage of financial secrecy and helping to mask the true ownership of funds. We are told—we have heard it again this evening—that the Crown dependencies and overseas territories are up to their necks in these activities and are central to tax avoidance and evasion. I think that the Minister has committed to making some changes—
Baroness Sanderson of Welton (Con)
I am sorry but perhaps I may remind the noble Lord of the three-minute speaking limit.
Lord Bhatia (Non-Afl) [V]
My Lords, Church Action for Tax Justice campaigns for taxation reforms. In its 2019 report, Tax for the Common Good, it argued that the current tax system was not being used to its full potential as a tool to improve fairness in society. It also argued tax should be perceived as a public benefit rather than as a burden on taxpayers, saying that:
“Growing levels of inequality and the threat of climate change are among the greatest challenges faced by today’s world, while the UK still lives with austerity measures which have seen living standards plummet and undermined trust in our economic system. Responding to these crises requires public spending … and it requires that we rethink our use of natural resources.
Yet in rich and poor countries alike, it is still too easy for large companies and wealthy individuals to avoid paying their fair share of tax. And too often, tax is seen as negative: a burden to be minimised. We can tell a different story about tax: that it allows us to contribute to services and infrastructure shared by all, and that paying it is not just a duty but a privilege.”
The report proposes several reforms of the tax system, including increasing taxes on wealth and reforms to inheritance tax. It also argues that the Government should consider replacing council tax and business rates based on the value of property with a new tax based on the value of the land the property is built on; changing the way businesses are taxed through increasing corporation tax; creating a financial transaction tax; creating a new tax targeted at the providers of digital services, such as Amazon; and using taxation as a means of addressing climate change, such as through new taxes targeting carbon consumption. The report also suggested the introduction of taxes on other resources, such as plastics used in packaging.
The report also recommended that the UK should co-operate with other countries on the issue of tax avoidance, including through establishing an automatic information exchange to enable tax authorities in different countries to better share information on income-generating assets held by foreign citizens holding companies within their jurisdiction. There should be country-by-country reporting of financial information, requiring companies to state where their economic activity occurs, and public registers of beneficial ownership for all jurisdictions, including the UK Crown dependencies. The report argues that this would ensure that the ultimate owners of shell companies are identified and required to pay the right amount of tax. The United Nations should get global taxation rules so that all nations are involved in decisions—
Baroness Sanderson of Welton (Con)
My Lords, I remind the noble Lord of the three-minute speaking limit.