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.
That’s why we support the Christian Aid campaign that is getting councils to ask bidders for local contracts to account for their past tax record. As part of the campaign, councils will flag the Fair Tax Mark as an example of enlightened business practice in this area and a demonstration that a businesses is paying the right amount of corporation tax in the right place at the right time.
The campaign will urge councils 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.