date: 19 April 2012
embargo: For immediate release
Many multi-national companies are paying a lower rate of tax on their profits than most people pay on their income or when buying items subject to VAT, the TUC says today (Thursday) as it urges the government to launch a comprehensive review of the tax system to ensure that everyone pays their fair share.
The TUC call comes as the CBI launches a new report on tax and business alongside Treasury Minister David Gauke MP at a Policy Exchange event in London today.
A TUC report in 2008 - The Missing Billions - found that the 700 largest corporations in the UK had an effective tax rate 7.5 percentage points below the corporation tax rate set by Parliament (30 per cent at the time).
With corporation tax now at 24 per cent, the effective rate for many big companies is well below 20 per cent - the rate that small businesses pay on their profits, basic rate income tax and VAT - says the TUC.
Media investigations about the tax arrangements of companies like Amazon, Google and Barclays show that some companies are paying virtually no corporation tax despite enjoying huge profits, says the TUC.
While perfectly legal, tax avoidance by multi-national corporations and super-rich individuals is costing the government at least £25bn a year - or £1,500 for every family in the UK - and undermining the UK tax system at a time when ordinary families are being squeezed by tax rises and falling wages.
The TUC is calling on the government to launch a comprehensive review of the tax system to create a level playing field and ensure that effective tax rates are as close as possible to the tax rates set by government.
The TUC suggests four ways that the government could ensure a fairer tax system:
TUC General Secretary Brendan Barber said: 'As living standards are squeezed, ordinary taxpayers cannot afford to keep footing the bill for tax avoidance by highly profitable companies and super-rich individuals.
'For all the tough talk from ministers on tax in recent weeks, multi-national companies and the super-rich were the big winners in last month's Budget, while small businesses and the young unemployed received no help at all.
'Big companies and wealthy individuals are now so adept at exploiting tax loopholes that they are seemingly able to choose their own tax contributions. This is both deeply unfair and risks fatally undermining people's confidence in the UK tax system.
'Everyone wants to see a competitive tax system. But there must be a level playing field, rather than one in which multi-national companies enjoy huge tax advantages over their smaller competitors.
'Most importantly, everyone must pay their fair share of tax so that we can all contribute to the public services and infrastructure that businesses and individuals rely upon.'
NOTES TO EDITORS:
- The TUC touchstone pamphlet The Missing Billions is available at www.tuc.org.uk/touchstone/missingbillions/1missingbillions.pdf
- The TUC report The Corporate Tax Gap is available at www.tuc.org.uk/extras/corporatetaxgap.pdf
- All TUC press releases can be found at www.tuc.org.uk
Liz Chinchen T: 020 7467 1248 M: 07778 158175 E: [email protected]
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: [email protected]
Elly Gibson T: 020 7467 1337 M: 07900 910624 E: [email protected]