In a significant step forward for tax justice, the UK government has said all councils in England, Wales and Northern Ireland must interrogate potential suppliers on any history of tax evasion and avoidance dating back to October 2012.
At stake is £50bn of annual local government procurement, money used to pay for everything from electricity to building construction. The ruling applies to any contracts or tenders initiated after October 2016.
Unlike previous regulations, which required local councils to scrutinise whether a company had been involved in illegal tax practices but overlooked the greyer area of tax avoidance, this new ruling requires councils to ask a more detailed set of questions that encompass both outright illegal practices and aggressive tax dodging that is outside the spirit of the law and something tax authorities are at last beginning to clamp down on.
Tax avoidance scandals undermine public trust, the head of Business in the Community has observed (paywall). Poll after poll suggests the public agrees. December’s results (pdf) from the Institute of Business Ethics’ annual survey about public perception of business behaviour saw corporate tax avoidance remain the top public concern in 2016, with 43% of the survey’s 2,000 respondents putting it as their issue of most concern.
A consistent approach
The idea of using the substantial purchasing power of local authorities to drive tax justice is something the Fair Tax Mark and Christian Aid have…