Oxford City Council has become the first local authority to sign up to the Councils for Fair Tax Declaration, which calls on the EU and UK governments to review procurement legislation and support greater powers for the exclusion of ‘tax dodgers’.
The declaration, drawn up by the Fair Tax Mark campaign, also commits cities, towns and districts to pursuing exemplary tax conduct in their affairs, and requires greater transparency from suppliers.
Councils signing up to the Declaration pledge to lead by example and demonstrate good practice in their tax conduct, including:
- ensuring contractors implement IR35 robustly and a fair share of employment taxes are paid;
- shunning the use of offshore vehicles for the purchase of land and property, “especially where this leads to reduced payments of stamp duty”;
- ensuring that there is clarity on the ultimate beneficial ownership of suppliers and their consolidated profit & loss position, “given lack of clarity could be strong indicators of poor financial probity and weak financial standing”;
- undertaking due diligence to ensure that not-for-profit structures are not being used inappropriately as an artificial device to reduce the payment of tax and business rates; and
- supporting calls for urgent reform of EU and UK law to enable municipalities to revise their procurement policies and better penalise poor tax conduct and reward good tax conduct.
Fair Tax Mark said there was “a pressing need for action”, claiming that research it commissioned had discovered that 17.5% of UK public procurement contracts commissioned by local and national government over the period 2014-19 were won by businesses with connections to a tax haven.
“The total combined worth of these contracts was an astonishing £37.5bn. Recent polling commissioned from ICM by the Fair Tax Mark has found that two-thirds (63%) of the public agree that the Government and local councils should consider a company’s ethics and how they pay their tax as well as value for money and quality of service provided, when undertaking procurement,” it said.
Paul Monaghan, Chief Executive of Fair Tax Mark, said: “As recipients of significant public funding, municipalities should take the lead in the promotion of exemplary tax conduct; be that by ensuring contractors are paying their proper share of tax, or by refusing to go along with offshore tax dodging when buying land and property. Where substantive stakes are held in private enterprises by councils, then influence should be wielded to ensure that such businesses are exemplars of tax transparency and tax avoidance is shunned.”
“When buying goods or services, unfortunately, current law significantly restricts councils ability to meaningfully factor in the tax conduct of suppliers. So, as part of this Declaration, councils will be adding their voices to the calls for urgent reform of EU and UK law to enable municipalities to revise their procurement policies and better penalise poor tax conduct and reward good tax conduct.”
Cllr Tom Hayes, Oxford City Council Cabinet Member, said: “Oxford is thrilled to become the first council to sign up to the Fair Tax Declaration. A transparent approach to tax is an essential tool for tackling inequality and we want our commitment to encourage other responsible public bodies to sign up.
“Everyone should pay their fair share, particularly as we’re living through an era of unprecedented public spending reductions. As a council, we see first-hand the challenge that this funding squeeze creates for crucial frontline services. Local government has a proud history of standing up for responsible public sector conduct, ranging from paying the real Living Wage to promoting Fairtrade. Oxford is proud to be doing both as a council that wears our values on our sleeves. Fair tax is no different.”