Reading councillors have signed a declaration committing the council to only deal with businesses that pay their fair share of tax.
At a meeting last Tuesday, after we had gone to press, Reading Borough Council signed up to the Councils for Fair Tax Declaration, a pledge not to work with companies that engage in tax avoidance.
Introduced as a motion to the council, it calls on the government to reform the way contracts are awarded, freeing councils up to either penalise or reward tax conduct when buying goods or services.
Proposing the motion, Cllr Alice Mpofu-Coles (Labour, Whitley) said tax avoidance deprives councils and communities of vital funding.
“The UK has £17 billion per annum in lost corporation tax revenues,” she said.
“In 2019-20 in Reading East, 5,072 children were in poverty, and in Reading West, 6,267 children were in poverty.
“Hard-working families are feeling the pinch with rising gas prices and food, yet they are told to pay more taxes by the Tory Government even after unscrupulous contracts were awarded during the Covid pandemic. Labour is calling for contracting to have greater transparency, accountability, and ethical sourcing.”
Seconding the motion, Cllr Jacopo Lanzoni (Labour, Caversham) said: “Everyone should contribute to the cost of the services they benefit from. You all will agree with me, I believe, in that this applies to each legal entity: not only individuals, but also businesses.
“Businesses benefit from public services in a way which is different and additional to the way their employees do.
“If we want taxes to be low for everyone, we need everyone – also large corporations – to pay their fair share of taxes. I want Reading Borough Council to be at the front of this change.”
Cllr Jason Brock (Labour, Southcote), the leader of the council, clarified that it already complies with everything in the motion, with the action being about lending the council’s voice to a national campaign by the Fair Tax Foundation.
Cllr Paul Carnell (Conservative, Caversham Heights) said tax should be reformed to disincentivise tax avoidance.
“Tax evasion is totally wrong. Nobody in this group would condone tax evasion. Tax evasion is illegal and if convicted, rightly, carries a heavy punishment,” he said. “Tax avoidance is, on the other hand, legal. The treasury works hard closing loopholes, but while those loopholes exist companies and individuals are entitled to use them if they wish.”
He continued: “So, what level should a fair tax be? All evidence shows that as levels of taxation fall the income from the tax rises. This is simply because the cost of the avoidance becomes more than the tax saved.
“We support a fair tax regime, that’s low and sustainable, where people keep more of their money and where companies have increased funding for investment. A regime where tax avoidance is not cost effective. That is the fair tax environment that we aspire to.”
Ultimately, the motion was passed unanimously at a full council meeting on Tuesday, July 5.
