The Fair Tax Mark – launched today in the UK

From the Financial Times, reporting on a project co-funded by TJN:

"Campaigners have ratcheted up pressure on big companies by ranking retailers according to their corporation tax payments and “transparency”, in the latest effort to make corporate tax a reputational issue.

The Fair Tax Campaign, a spin-off from the Tax Justice Network pressure group, issued a report on Thursday that awarded marks according to a company’s tax disclosures, whether they paid an “acceptable” rate of tax on profits and whether they used havens."

From the Tax Research blog of Richard Murphy, who has been co-working on this for six months:

Over the last six months I’ve been working with Meesha Nehru on the Fair Tax Mark, which we launched this morning. It’s got its own website here.

The first Fair Tax Mark report ranks 25 UK retailers on their tax and transparency – the latter being more important than the rate paid. As the ranking shows, one company – Greggs – got full marks whilst Majestic Wines came close. Others missed the mark by a long way, so it’s important to note what we rank on, which, as the Mirror notes this morning, is three separate measures:

• Do companies publish enough information so we can tell how much activity they have in the UK, what profit they make here and how much tax they pay in this country?

• Does the company pay an acceptable rate of tax on its profits, and does it look likely that a fair part of that profit is declared in the UK?

• Does the company use tax havens, indicating whether or not it is likely to be involved in tax avoidance.

There are five points available for each measure and firms getting 12 or more out of 15 are awarded a Fair Tax Mark.

As we found, there are widely varying results:

• 9 of the 25 companies scored 0 for their country-by-country reporting – meaning we could not get sufficient data on their UK activities to assess whether they paid fair tax.

• 6 companies scored 0 for their tax rate – meaning they paid low rates of tax on average over six years and we could not tell whether they paid it on appropriate UK profits.

• Only two companies scored 0 for tax haven use – meaning they did not provide enough information to tell whether they used them or not.

• Only 3 companies scored a maximum 5 points on tax haven usage – meaning they did not use tax havens (Greggs, Majestic Wine and Asos – the online fashion retailer).

What was also interesting was interpreting the results:

• As the size of a company increased its Fair Tax Mark fell, on average

• As companies got bigger their use of tax havens increased, on average

• As companies got bigger their tax rates fell on average, suggesting that bigger companies are working the tax system to their advantage

• Country-by-country reporting data got worse as companies got bigger.

As my colleague, Meesha Nehru, told the press:

People are increasingly expecting companies to pay the tax that society demands of them or to at least explain why not.

They’re not paying, and they’re not explaining and neither are acceptable – and that’s the message of this report and the Fair Tax Campaign which believes that fair tax is at the heart of a good society.

We haven’t got that society right now, and that’s why people want Fair Taxes back.

This Mark is intended to help people assess who is, and is not, telling us what we need to know to assess whether there’s a fair tax system in place – and that, we think, is an important step in taking this debate forward.