Agenda item

Full Council notes that:

1.    The pressure on organisations to pay their fair share of tax has never been stronger.

2.    Polling from the Institute for Business Ethics finds that “corporate tax avoidance” has, since 2013, been the clear number one concern of the British public when it comes to business conduct.

3.    Almost two thirds of people (64%) 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 awarding contracts to companies.

4.    Around 17.5% of public contracts in the UK have been won by companies with links to tax havens.

5.    It has been conservatively estimated that losses from multinational profit-shifting (just one form of tax avoidance) could be costing the UK some £17bn per annum in lost corporation tax revenues.

6.    The Fair Tax Mark offers a means for business to demonstrate good tax conduct, and has been secured by a wide range of businesses across the UK, including FTSE-listed PLCs, co-operatives, social enterprises and large private businesses.

Full Council believes that:

1.    Paying tax is often presented as a burden, but it shouldn’t be.

2.    Tax enables us to provide services from education, health and social care, to flood defence, roads, policing and defence. It also helps to counter financial inequalities and rebalance distorted economies.

3.    As recipients of significant public funding, local authorities 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.

4.    Where councils hold substantive stakes in private enterprises, influence should be wielded to ensure that such businesses are exemplars of tax transparency and tax avoidance is shunned.

5.    More action is needed, however, as current and proposed new UK procurement law significantly restricts councils’ ability to either penalise poor tax conduct (as exclusion grounds are rarely triggered) or reward good tax conduct, when buying goods or services.

6.    UK cities, counties and towns can and should stand up for responsible tax conduct - doing what they can within existing frameworks and pledging to do more given the opportunity, as active supporters of international tax justice.

Full Council resolves to:

1.    Approve the Councils for Fair Tax Declaration.

2.    Lead by example and demonstrate good practice in our tax conduct, right across our activities.

3.    Ensure IR35 is implemented robustly and contract workers pay a fair share of employment taxes.

4.    Not use offshore vehicles for the purchase of land and property, especially where this leads to reduced payments of stamp duty.

5.    Undertake due diligence where possible to ensure that all new suppliers wishing to trade with the council are transparent and complete declarations on ownership, consolidated profit and loss, that they pay due taxes, business rates and other taxes in line with the Fair Tax standards. Promote the Fair Tax standard to all existing suppliers and request that they seek compliance with the standard. 

6.    Promote Fair Tax Mark certification especially for any business in which we have a significant stake and where corporation tax is due.

7.    Support Fair Tax Week events in the area, and celebrate the tax contribution made by responsible businesses are proud to promote responsible tax conduct and pay their fair share of corporation tax.

8.    Support calls for urgent reform of UK procurement law to enable local authorities to better penalise poor tax conduct and reward good tax conduct through their procurement policies.

Supporting information available at: https://fairtaxmark.net/wp-content/uploads/2023/07/Councils-for-Fair-Tax-Declaration-ENG-CYM.pdf

Councillor Lee Steptoe proposed the following motion:

Full Council notes that:

1. The pressure on organisations to pay their fair share of tax has never been stronger.

2. Polling from the Institute for Business Ethics finds that “corporate tax avoidance” has, since 2013, been the clear number one concern of the British public when it comes to business conduct.

3. Almost two thirds of people (64%) 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 awarding contracts to companies.

4. Around 17.5% of public contracts in the UK have been won by companies with links to tax havens.

5. It has been conservatively estimated that losses from multinational profit-shifting (just one form of tax avoidance) could be costing the UK some £17bn per annum in lost corporation tax revenues.

6. The Fair Tax Mark offers a means for business to demonstrate good tax conduct, and has been secured by a wide range of businesses across the UK, including FTSE-listed PLCs, cooperatives, social enterprises and large private businesses.

Full Council believes that:

1. Paying tax is often presented as a burden, but it shouldn’t be.

2. Tax enables us to provide services from education, health and social care, to flood defence, roads, policing and defence. It also helps to counter financial inequalities and rebalance distorted economies.

3. As recipients of significant public funding, local authorities 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.

4. Where councils hold substantive stakes in private enterprises, influence should be wielded to ensure that such businesses are exemplars of tax transparency and tax avoidance is shunned.

5. More action is needed, however, as current and proposed new UK procurement law significantly restricts councils’ ability to either penalise poor tax conduct (as exclusion grounds are rarely triggered) or reward good tax conduct, when buying goods or services.

6. UK cities, counties and towns can and should stand up for responsible tax conduct - doing what they can within existing frameworks and pledging to do more given the opportunity, as active supporters of international tax justice.

Full Council resolves to:

1. Approve the Councils for Fair Tax Declaration.

2. Lead by example and demonstrate good practice in our tax conduct, right across our activities.

3. Ensure IR35 is implemented robustly and contract workers pay a fair share of employment taxes.

4. Not use offshore vehicles for the purchase of land and property, especially where this leads to reduced payments of stamp duty.

5. Undertake due diligence where possible to ensure that all new suppliers wishing to trade with the council are transparent and complete declarations on ownership, consolidated profit and loss, that they pay due taxes, business rates and other taxes in line with the Fair Tax standards. Promote the Fair Tax standard to all existing suppliers and request that they seek compliance with the standard.

6. Promote Fair Tax Mark certification especially for any business in which we have a significant stake and where corporation tax is due.

7. Support Fair Tax Week events in the area and celebrate the tax contribution made by responsible businesses are proud to promote responsible tax conduct and pay their fair share of corporation tax.

8. Support calls for urgent reform of UK procurement law to enable local authorities to better penalise poor tax conduct and reward good tax conduct through their procurement policies.

Supporting information available at: https://fairtaxmark.net/wp[1]content/uploads/2023/07/Councils-for-Fair-Tax-Declaration-ENG[1]CYM.pdf

The motion was duly seconded.

The following points were raised during debate:

·       One Member queried how the principle of the motion could be implemented and whether it could be considered by the Governance and Audit Committee.

·       Future transparency in any of the Council’s contractual arrangements where possible was discussed.

·       Whether suppliers that the Council currently worked with abided by the Fair Tax proposal and what the possible changes within their contracts would be, if the proposals were accepted.

·       Concerns were raised on the possible restrictions on the Council and the obligation to get the best value.

·       Further concerns were raised on the implementation of the IR35 legislation and how many of the Council’s housing contractors were IR35 compliant, impact on pensions, treasure strategy, the cost of due diligence and training.

·       It was suggested that the motion be referred to the Finance and Economic Overview and Scrutiny Committee or the relevant Committee for further scrutiny.

·       Clarification was sought from the Monitoring Officer in regard to contract workers and businesses in which the Council had stakes. It was questioned as to whether Members should declare an interest.

The Monitoring Officer highlighted that the motion did not outline any specific organisations and would not affect any Members adversely, if the motion was accepted.

·       It was noted that the motion was to pass a policy for the Council to have the aspiration to be a fair tax organisation and look into the financial arrangements, contracts and investments.

Upon being put to the vote, the motion was AGREED.