In this guest blog, we chat to Ethical Consumer about their new tax campaign encouraging the government to impose a windfall tax on ‘Big Tech’ companies to help cover the social costs of the pandemic’s impact.
Tax, it can sound like a dirty word nowadays. Yet it is core to the smooth, equitable, functioning of society. We constantly hear on the news that there is no money left in the kitty, and that the government is like a household, with a limited budget. Yet here we are, in the midst of the biggest crisis since WWII: the Covid-19 pandemic. In order to prevent the entire collapse of society, the government has had to, rightly, fork out billions: £300bn so far to be exact. But already, our current Chancellor of the Exchequer, Rishi Sunak, has warned that ‘hard choices’ will need to be made to tackle the record levels of national debt incurred during this Covid-19 pandemic, in order to ‘balance the books’ for future generations.
Here at Ethical Consumer, we don’t believe that these ‘hard choices’ should take the form of tax rises or spending cuts on ordinary people. We fully agree with the Christian vision of a just and fair society in which the tax system plays a vital role. Just like Church Action for Tax Justice, Ethical Consumer do not see tax as a burden. It is a way of showing love for our neighbours and is a fundamental tool in creating a just and equal society in which no one suffers with poverty or inequality. To help us achieve this mission, we have launched a campaign to ask the government to impose a 10% Digital Services Tax (DST) on the Tech Giants (including Google, Amazon, Facebook, Microsoft, Apple and Netflix) to contribute to the estimated £300bn cost of the Covid-19 pandemic so far. It has not escaped our attention that these digital companies are not only making exceptional profits in the new locked-down world, but also have long histories of systematic tax avoidance all round the world.
It may interest you to know that the UK has already imposed a Digital Services Tax of 2% since April 2020. Thus, we recommend building upon that 2% tax rate and increasing it to 10% for a temporary ‘windfall’ period. In December 2020, we made a submission to the Treasury Select Committee on Tax after Coronavirus, advocating for precisely this. The DST itself is designed to be a temporary measure, until the Organisation for Economic Co-operation and Development (OECD), helps countries to agree to new global tax rules to prevent profit shifting by multinational digital companies.
Of course, any new iteration of a DST would have some safeguards in place to prevent companies passing on the tax to their consumers. Furthermore, the DST should also be applied to product sales, otherwise, companies such as Amazon will not be brought within its scope. We also call for exceptions to be made for other companies such as John Lewis, which are able to demonstrate through transparent reporting a good record of paying tax, to be excluded from the sales element of the DST. If you would like to learn more about our campaign, please click on this link.
We would love for you as individuals to join us in our fight for a 10% DST levied on the Tech Giants. You can find out more by visiting our website, keep up to date with our work by following us on Facebook, Instagram or Twitter, join our campaign by emailing your MP or host our Covid-19 Tech Tax Campaigner, Nabila Ahmed as a speaker at your online event.