Agenda item

On a motion from Councillor Tom Davies, seconded by Councillor Mark Elliott, it was

RESOLVED that

Our 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. Two thirds of people (66%) believe the Government and local councils should at least 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.

B&NES 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.

7. The Conservative government has failed to make meaningful progress on tackling tax avoidance despite international consensus reached at the G7 summit in June 2021, and has failed to push through key improvements that would have made the system fairer and more effective and would have netted the UK an additional £6.8 billion year.

8. Currently case law reinforces that a company’s tax status cannot be used as a reason to disbar them from a procurement process; the Lib Dems believe that a real opportunity was missed by the Government when it published new procurement regulations this year which failed to allow public sector organisations to consider the tax arrangements of potential contractors.

9. Government instructions to support the creation of “new businesses, new jobs and new skills in the UK” through procurement are at odds with the government’s continuing disregard towards this issue.

10. By contrast, the Liberal Democrats are committed to ensuring that all businesses operating in the UK pay their fair share of tax in the UK on those operations and also to restricting the ability of companies to unfairly shift profits out of the UK to low tax jurisdictions.

Our 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. Continue to ensure IR35 is implemented robustly and contract workers pay a fair share of employment taxes, as reported to the cross-party Corporate Policy Development and Scrutiny Panel on 11 July 2022.
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 to ensure that not-for-profit structures are not being used inappropriately by suppliers as an artificial device to reduce the payment of tax and business rates.

6. Demand clarity on the ultimate beneficial ownership of suppliers UK and overseas and their consolidated profit & loss position, given lack of clarity could be strong indicators of poor financial probity and weak financial standing.

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

8. 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.

9. 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 and call upon our two local MPs to write to the relevant Minister to advocate for these changes.

[Notes;

1.  The above resolution was carried as a result of a successful amendment to the published motion, with the amended sections shown in bold.

2.  The successful amendment was carried with 26 Councillors voting in favour, 8 Councillors voting against and 9 Councillors abstaining.

3.  The amended motion was then carried as the substantive motion with 38 Councillors voting in favour, 8 Councillors voting against and 5 Councillors abstaining.]