The latest annual report only highlights government failure to properly tax the super rich, writes Andrew Speke for Red Pepper.
This year’s Sunday Times Tax List – the list of the 100 people who pay the highest amounts of UK tax – was published at the end of January. In revealing who the highest UK taxpayers are, it appears to celebrate those who are paying their taxes and encourage those who aren’t to do so. Like its sister publication the Sunday Times Rich List, the Tax List provides vital insight into the wealth of the richest individuals and families in the UK. It also highlights the failure of our current taxation system to effectively tax the rich.
These are the five main takeaways from this year’s list:
1. It’s worrying that we need a tax list
The Tax List may be well-intended and the positive publicity it generates is a genuine incentive to the wealthy to pay their taxes. But what it celebrates should really be the bare minimum we expect of those included in the list. That a tax list is newsworthy at all reflects the fact that for many of the richest people, the amount tax they pay is a matter of choice, and too many of them choose to pay very little. This also connects to a broader issue of how taxes are generally discussed as a burden on individuals, rather than an investment in public services, infrastructure and social security that benefits everyone.
2. The richest taxpayers still have too much even after paying tax
Another reason why we should be cautious in showing excessive gratitude to those paying the most tax is that their after tax wealth is still eye-watering. Of the sixteen of the top twenty for whom data is available on their wealth and UK tax payments, their average wealth amounted to £4.58bn according to the rich list. Deducting their tax contribution reduces this average to a mere £4.4bn. Even lower down the list most of those included have after-tax wealth in the hundreds of millions. If you’ve still got enough money to live a life of absolute luxury multiple times over, you’ve got more than you need and probably shouldn’t have accumulated it in the first place. Over the medium term we need to address that, but for now it shows that nobody on the list is over taxed and they should be contributing more.
3. Most of the richest people in Britain don’t pay enough tax to make the list
Just four of the top twenty on the Rich List appear in the top 100 of the Tax List. The vast majority of those in the higher echelons of the Rich List are foreign oligarchs living in the UK, who while multi-billionaires, appear to be paying very little in UK taxes. This suggests that trying to attract international oligarchs to Britain doesn’t necessarily benefit public services much, and suggests that the supposed economic benefits of bending over backwards for these people (who are often pretty unsavoury characters) are much less significant than the politicians, lobbyists and think tanks that they fund proclaim. If anything, the key insight from the publication of the list is that we should be looking at ways to ensure they make a much more substantial tax contribution in return for being able to enjoy their obscene wealth in the UK. Labour’s proposals to scrap the non-dom status would be a positive start in this regard.
4. Conversely, lots of homegrown billionaires continue to pay tax here
From entrepreneurs of successful companies to celebrities such as JK Rowling and Sting, there is no shortage of British born billionaires who continue to live and pay their taxes in the UK. While revelations like the Panama and Paradise papers highlight the urgent need for international action on more effective taxation of the super rich, it appears to be the case that if the UK is your home, it’s where your business assets and other sources of your wealth are located, then the desire and the ability to dodge tax are limited. As such we should be more strident in demanding that those with obscene wealth contribute a bit more.
5. Controversial figures use their tax contribution as a PR strategy (possibly paying more as a result of public criticism)
Entrants in the list such as Mike Ashley, Denise Coates, Tim Martin and James Dyson have all been previously criticised in the UK press over their employment and business practices, tax arrangements or for being emblematic of the gross inequality within the UK due to their enormous wealth. The tax list helps the super rich to use their tax contribution as a defence against criticism of their anti-social behaviour. While this again shows that we shouldn’t just sit back and applaud people for contributing a small proportion of the obscene and disproportionate wealth, the fact they’re making these payments suggests that organisations scrutinising and drawing attention to the business practices and social and environmental costs of the super rich are at least having a positive impact on funding for public services.
In summary, giving the rich list more than a few seconds of considered thought inevitably leads to the conclusion that the UK has a major problem with the super rich. For now this means we should aim to get a much more meaningful tax contribution – particularly from those plutocrats that don’t make the list, but also from those who do. Over the longer term the ultimate goal should be to stop anyone from accumulating such excessive fortunes – typically at the expense of their employees, customers or wider society – in the first place.