Inequality in Wales and the need for a Tax Dodging Bill

Kirsty Davies says we need to take further measures to overcome inequality in Wales

Economic inequality is out of control. The growing gap between the rich and the rest is preventing millions of people from lifting themselves out of poverty.

Extreme inequality is both morally wrong and economically damaging. It is in everyone’s interests to tackle it.

Despite decades of economic growth, regeneration and anti-poverty policies, there are significant inequalities in Wales with many Welsh people facing economic inactivity, mental and physical ill health, poor educational attainment and increasing exclusion.

The results of our recently published Welsh Doughnut, a relatively simple but powerful economic model, highlighted this worrying truth. The report showed that almost one-quarter of households in Wales are living in relative poverty and a staggering 40% of households are unable to heat their homes adequately. This is happening right here, on our doorstep.

On a global scale, we’re living in a world where the gap between the rich and the rest is rapidly increasing and as the wealth of the few grows, the poorest are being left behind. If current trends continue then the richest 1 per cent of the world’s population will own more than half the world’s wealth by 2016. Oxfam’s research last year showed that, in the UK, just five families had the same wealth as over 12m Brits put together.

Creating a fairer tax system could make a big difference in the fight against extreme inequality. The British public are right to be outraged at the constant stories we’re hearing of multinational companies, such as Amazon (who have a warehouse in Jersey Marine, on the border between Neath and Swansea) and Starbucks (who have fifteen cafes in Wales), who are making huge profits and not paying their fair share, or big accountancy firms and high street banks helping their customers to exploit loopholes in a ludicrously complicated tax system. This really angers me, not just because it is unfair, but because it is depriving governments around the world of vital revenue needed to combat poverty.

Stopping multinational companies from dodging their taxes, which cheats societies out of billions of pounds of lost revenue, must be a top priority for the next government.

Tax dodging is costing governments billions – both in the UK and in developing countries. This is money which is vital for tackling poverty.

The Tax Dodging Bill campaign is calling for all political parties to pledge to introduce a new Bill in the first 100 days after the election to tackle corporate tax dodging in the UK and in poorer countries, and to make sure the additional revenue raised is used to fight poverty.

Only a commitment to a full package of reforms will send the message that the problem is being taken seriously. A Tax Dodging Bill would make it harder for multinationals to dodge UK taxes, stop them from getting unjustified tax breaks, make the UK tax regime more transparent and ensure that UK tax rules don’t encourage British companies to avoid tax in developing countries. Such a bill could bring in at least £3.6bn a year to the UK Treasury, which is the equivalent of £600 for every British household living below the official poverty line.

Kirsty Davies is Head of Oxfam Cymru

8 thoughts on “Inequality in Wales and the need for a Tax Dodging Bill

  1. Do you have a reference for the Tax Dodging Bill? This is undeniably an issue that needs to be addressed but the challenge is a practical question of how to legislate without breaching the principles of a just legal system.

  2. And many of us would also like to see much greater scrutiny of the way tax-payer and charity funded NGOs use the money they are given… Far too much of what they do now is just political activism, much of it involving international socialist ideals of wealth re-distribution with little understanding that money has to be earned before it can be spent.

  3. In recent history International Investment by the so called UK Government was a method of giving with one hand and taking away with the other.

    The Thatcher years, and before, saw roads being funded that started in the middle of nowhere, went through nowhere to arrive at nowhere. Likewise there were airports without passengers and planes, air traffic systems without air traffic, power stations for people without electricity, multistory office buildings without businesses and best of all (arguably the strangest) were the reservoirs to pipe water to migratory tribes!

    Of course the money was actually to go into the pockets of English companies and individuals who were expected to be Conservative supporters. Since the NGOs have taken over this function over the last 20 years or so things are nowhere near as bad.

    Just goes to show that we should get out of UK and its injustice, exploitation and inequality ASAP.

  4. I am not sure if it’s inequality in wales or whether there is enough businesses or industry here to bring more jobs, wage competition etc to lift wales out of poverty. What I would really like to see is how the welsh language is affecting potential businesses, as I see quite a few major companies being targeted by the welsh language board over the use/non use of the language. For some small businesses indeed it could be costly and time consuming to adopt a language proceedure that has no relevance to it’s own concerns. Conclusion ….set up business in England.?

  5. I agree; extreme inequality is morally wrong and I think its probably restricts economic development. I would think that most people have a similar view the question is what do we do about it. How will a Tax dodging bill work?What does it do that governments haven’t already done? The capacity of multinationals to avoid or minimise taxation is a major and growing problem so what does this bill do about it? At present countries compete to offer tax advantages to companies. Our near neighbour The Irish Republic is particularly adept at this as are the Chanel islands and the Isle of Man. International Tax Dodging could only be restrained by common(or near common) taxation systems.

  6. We’re calling for a law that will:

    *Make it harder for big companies to dodge UK taxes and ensure they’re not getting unfair tax breaks
    *Ensure UK tax rules don’t encourage big companies to avoid tax in developing countries
    *Make the UK tax regime more transparent and tougher on tax dodging
    *We are also calling for political parties to commit to using the funds raised in the UK to tackle poverty here.

    For more information follow this link to read our tax-dodging bill policy briefing –

  7. One thing a bill could do is specify a minimum tax rate for individuals or companies resident in the UK so the effect of exploiting loopholes to shelter declared income could be restricted. Non-dom status could be removed for individuals. To deal with international companies using tax havens and transfer pricing you would suppose that international agreement would be necessary so companies could be taxed on their global earnings and the proceeds distributed according to a formula depending on where their operations were actually based. The US is not afraid of taxing companies on foreign earnings though. Perhaps we could take a leaf or two from their book.

  8. Thank you Kirsty your link does give some information on how the bill could work as well as what it might achieve. It also recognises the difficulties in establishing an international agreement. In the context of Click on Wales we might consider how such a bill fits in with the oft repeated desire to devolve UK taxation policy and create tax incentives for business investment.

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