Mary Patel Networks Manager, Fair Tax Mark 9th September 2019 The unfairness of aggressive tax avoidance is felt keenly by the general public: it grates to see the tax system gamed in the name of profit maximisation, whilst councils and other public bodies have their budgets hit hard. Fair Tax Mark polling has found that two-thirds of the public agree that the government and local councils should consider a company’s ethics and how they pay their taxes as well as value for money and quality of service, when undertaking procurement. Co-operative Party leading the way At the Fair Tax Mark, we have shined a light on good practice since 2014, certifying businesses which pay the right amount of tax, at the right time and in the right place. Over 50 businesses have been certified to date and in many sectors co-operatives have led the way – including the Co-operative Party, who were first political party certified in 2016! Councils for Fair Tax Declaration From the outset, Councils across the UK have approached us wanting to know what further steps they can take to influence tax conduct for the better. In response, we’ve launched the Councils for Fair Tax Declaration, with the support of Labour and Co-operative councillors leading to Oxford City Council being the first place to approve. We’re delighted that since then, the work of Labour and Co-operative councillors has seen the Declaration approved by Peterborough City Council, and separately Oldham Borough Council and Cannock Chase District Council have come on board too. There is a pressing need for action given research commissioned by us from DatLab has discovered that 17.5% of UK public procurement contracts (by value) commissioned by local and national government over the period 2014-19 were won by businesses with connections to a tax haven. The total combined worth of these contracts was an astonishing £37.5bn. By signing up to the Councils for Fair Tax Declaration, councils commit to leading by example on their own tax conduct and demanding greater transparency from suppliers. This includes ensuring contractors implement IR35 robustly and a fair share of employment taxes are paid; shunning the use of offshore vehicles for the purchase of land and property; ensuring that there is clarity on the ultimate beneficial ownership of suppliers and their consolidated profit & loss position (given lack of clarity could be strong indicators of poor financial probity and weak financial standing); and, undertaking due diligence to ensure that not-for-profit structures are not being used inappropriately as an artificial device to reduce the payment of tax and business rates. In developing the Councils for Fair Tax Declaration, we hoped to build a package of measures which would substantially leverage councils’ procurement spend. However, legal advice confirmed that current procurement law significantly restricts councils’ ability to meaningfully factor in the tax conduct of suppliers. So, as part of this Declaration, councils will be adding their voices to the calls for urgent reform of EU and UK procurement law to enable municipalities to better penalise poor tax conduct and reward good tax conduct. Fair Tax Week 2020 We’re also calling on Councils to participate in Fair Tax Week 2020, joining with responsible business who are proud to pay their fair share of corporation tax and explore the positive contribution that taxes make to society. We’d love to see more Co-operative Party councillors getting behind this issue, just as you have done with a host of other social justice issues. As Labour and Co-operative Councillor Tom Hayes, of Oxford City Council, said at the time the Declaration launched: “Local government has a proud history of standing up for responsible public sector conduct, ranging from paying the real Living Wage to promoting Fairtrade. Oxford is proud to be doing both as a council that wears our values on our sleeves. Fair tax is no different.” What you can do To download a copy of the Councils for Fair Tax Declaration and a Sample Motion visit our website. You’ll also find contact details in case you have any questions. We’re also calling on Government to make responsible tax conduct an explicit consideration in commissioning for social value. You can read more about our views on this here.