Today (27th January) a campaign has been launched across England and Northern Ireland urging people to lobby their local councils to get tough with companies that dodge tax. The Fair Tax Mark will be supporting this campaign, which has been developed by Christian Aid. Corporate tax evasion and avoidance are having an incredibly damaging impact on the world’s poorest countries, to such a level that it is costing them $160bn a year – far more than they receive in aid.
Councils in England alone spend some £45 billion a year buying goods and services from companies and that gives them a lot of influence over suppliers. The prospect of losing a multi-million pound contract is likely to concentrate some companies’ minds and make them think harder about whether to dodge tax, here or in a developing country.
As part of the campaign for local councils to tackle tax dodging, it is envisaged that bidders for local council contracts would be asked to account for their past tax record. In addition, the Fair Tax Mark will be flagged as an example of enlightened business practice and a demonstration that not all businesses are aggressive tax dodgers, but rather accept that they need to pay the right amount of corporation tax in the right place at the right time.
Already, some are moving in the right direction. In December, Oxford City Council voted unanimously to investigate whether and how the council can include rigorous questions about companies’ tax practices in council procurement procedures. Detailed tax compliance questions have been adopted by Belfast City Council, and the Fair Tax Mark has been engaging with a major city in northern England and expects to be to announce a major positive development very soon.
Paul Monaghan of the Fair Tax Mark commented: “This campaign has the potential to be the ultimate carrot and stick. It aims to hurt the tax dodgers via the loss of lucrative contracts, whilst incentivising those paying a fair share of tax. People already rightly expect their local council to screen out suppliers engaged in fraud, corruption and child labour. Tax dodging can and should be added to this list, especially at a time when local government is faced with so many painful cuts to local services.”
As part of the campaign, councils will be urged to pass supporting motions that will push forward the cause of ethical procurement as below.
Council notes that:
- corporate tax evasion and avoidance are having a damaging impact on the world’s poorest countries, to such a level that it is costing them far more than they receive in aid
- this is costing the UK as much as £30bn a year
- this practice also has a negative effect on small and medium-sized companies who pay more tax proportionately
Council further notes:
- the UK Government has taken steps to tackle the issue of tax avoidance and evasion by issuing Procurement Policy Note 03/14, which applies to all central government contracts worth more than £5m
- the availability of independent means of verifying tax compliance, such as the Fair Tax Mark
- In early 2015 new regulations required public bodies, including councils, to ask procurement qualification questions of all companies for tenders over £173,000 for service contracts and £4m for works contracts. However, these questions are not as detailed as the PPN 03/14.
- Council believes that bidders for Council contracts should be asked to account for their past tax record, using the standards in PPN 03/14, rather than the lower standards in the recent regulations. Council therefore calls for procurement procedures to be amended to require all companies bidding for council contracts to self-certify that they are fully tax-compliant in line with central government practice, using the standards in PPN 03/14, applying to contracts of the size specified above.
- Council asks the Cabinet to publicise this policy and to report on its implementation annually for the next three years.