Fair Taxation after the Crisis

‘We are all in this together’ has been a mantra in the coronavirus crisis. In one sense of course it is true. Almost every person in the United Kingdom, and billions of people worldwide, have been affected by the pandemic. Everyone’s lives have changed. But we all came into the crisis differently positioned. Indeed, stark inequality in the United Kingdom has meant some communities came into the crisis with far more resources than others. This has mattered significantly as people have been thrown back into their homes (if they have secure homes to live in) on lockdown. The crisis has then affected people very differently. Some people have faced sharp losses in income, while others have increased their wealth.


‘We are all in this together’ has been a mantra in the coronavirus crisis. In one sense of course it is true. Almost every person in the United Kingdom, and billions of people worldwide, have been affected by the pandemic. Everyone’s lives have changed.

But we all came into the crisis differently positioned. Indeed, stark inequality in the United Kingdom has meant some communities came into the crisis with far more resources than others. This has mattered significantly as people have been thrown back into their homes (if they have secure homes to live in) on lockdown. The crisis has then affected people very differently. Some people have faced sharp losses in income, while others have increased their wealth.

All of these experiences – the fact of people coming into the crisis with very different levels of economic resilience, the fact of people being impacted in disparate ways, the fact that people will emerge out of the crisis in quite different positions – point to the unjust structure of wealth and income in the United Kingdom economy. As we rethink the underlying tenets of our economy and society in the aftermath of coronavirus, and at a time when there is widespread agreement that we cannot revert to the pre-crisis normal, this is an opportune moment to reflect on how our tax system could be transformed to tackle these injustices.

As with other position papers, this note is not a comprehensive analysis of how tax policies should be designed and implemented. Some other position papers have discussed particular tax recommendations, such as a financial transactions tax, so those proposals are not repeated below. Instead, the note sets out key moments during the crisis where unequal economic impacts have been highlighted: through early share price analysis; discussion of the position of renters; analysis of disparities in covid-19 diagnosis, in particular in terms of ethnicity; and breakdowns of people’s incomes after several months of lockdown. The position paper then sets out five key changes that could be implemented after the crisis to secure a measure of tax justice. How Unequal Impacts Were Revealed During Early Months of the Crisis

There was widespread acknowledgment before the coronavirus crisis that the United Kingdom was a starkly unequal society. But early on in the crisis there was evidence that certain inequalities were particularly exposed, or worsened, by the events of recent months.

One of the first hints was the Institute for Fiscal Studies’ analysis of the impact of coronavirus on London Stock Exchange share prices in late March. This was an early assessment, which could only examine industries with businesses listed on the London Stock Exchange. Nonetheless the data was revealing. It showed that tourism, leisure, and manufacturing industries were hardest hit by the crisis in its initial weeks. However, some industries “outperformed the market”: food and drug manufacturers, utilities, mobile telecommunications, and firms doing medical and biotech research. These appeared to be the initial ‘winners’ of the crisis.

It was clear from the Government’s refusal to increase statutory sick pay or levels of Universal Credit that those reliant on either would not receive generous support during the crisis. By early May momentum it was also becoming clear that economic pressure was being placed on renters, who were not directly supported by the government’s furlough scheme, support for the self-employed or businesses, or mortgage holiday plan. While those in work were often given the option of 80% of guaranteed income via furloughing, renters received no relief beyond a suspension of certain legal proceedings. The New Economics Foundation (NEF) estimated that coming into the crisis, 63% of private renters had no savings; as a result of this and the lack of support offered and low levels of Universal Credit, NEF suggested “many renters will not be able to meet their housing costs”. Renters, it was clear, were losing out.

In June, the Government’s report on disparities in coronavirus’ health impact revealed further inequalities, some of which were exacerbated by treatment and action during the first half of 2020. That report, which was strikingly lacking in suggested polciy solutions, noted that “people who live in deprived areas have higher diagnosis rates and death rates than those living in less deprived areas.” Members of Black ethnic groups were most likely to be diagnosed. Over 10,000 coronavirus cases were identified in the nursing and midwifery profession; deaths in care homes accounted for 27% of deaths from coronavirus up to 8 May. The report helped to highlight who was likely to feel the economic and social strain of coronavirus most sharply.

Evidence also began to emerge in mid-2020 on those doing particularly well out of the crisis. Media outlets reported on multiple multinational law firms encouraging the taking of lawsuits by companies who could claim that coronavirus policy measures constituted ‘expropriation’, using investor-state dispute settlement clauses in free trade agreements. The Resolution Foundation conducted a survey of 6,000 working-age adults, focusing on income and consumption. When combining analysis of income and spending changes, the Resolution Foundation found that 38% of adults in the top income quintile had experienced no income hit alongside a reduction in spending, implying that household budgets had benefited from the crisis. In contrast, just 12% of adults in the bottom quartile had experienced no income hit alongside a spending reduction. This analysis confirmed what we had already known: the crisis was being experienced very unevenly.

The crisis is ongoing at the time of writing. More evidence will emerge. But what is clear already is that the crisis has exposed, or worsened, inequalities between rich and poor, between members of black and other ethnic minority groups and members of white ethnic minority groups, between landlords and renters, between those in work and those not in work, and between some companies that have done very well out of the crisis and others that have suffered. It is no surprise that the crisis has reinvigorated debates about how wealth should be shared after the crisis, to deal with these unequal impacts and to tackle the injustices that the crisis has revealed.

Tax Justice

One proposal on which there has broad advocacy, across the political spectrum, is for a windfall tax after the coronavirus crisis. This would not be done to ‘pay for the crisis’, but would instead share wealth acquired through the crisis to provide further revenue for social services, on which we will all rely as we emerge out of this health and social crisis. Another proposal has been for a windfall tax on the finance sector (some of which has benefited significantly from the crisis, as noted in another position paper). 53% of the public were said to support a tax on industries that have thrived during the crisis, with this being supported by 54% of Conservative voters. Food retailers have been identified as one group of businesses that have done particularly well out of the crisis. A further suggestion was for an excess profits tax on all businesses (exempting small businesses), which could tax excess profits at 76%. The 1997 Labour Government, of course, introduced a windfall tax on the profits of privatised utilities, raising £5 billion. The 2019 Labour manifesto proposed a windfall tax on oil and gas companies. Excess profits could be taxed over a defined period during the coronavirus crisis, either at a level set above a defined level of reasonable profit or relative to previous profits. An alternative, more medium-term form of revenue-raising from successful business would involve increasing corporation tax paid on business profits, which was estimated in 2019 (in Labour’s manifesto costings) to raise some £24 billion in the fifth year of its implementation if the rate was increased to 26% with a 21% small profits rate.

Given the widespread use of tech platforms (by those with money to spend) like Amazon and Netflix, there is the case for a tax on these tech platforms that goes beyond the Government’s puny Digital Services Tax (which will raise just £0.5 billion by 2024/2025). But there is a far more efficient and effective policy measure, which does not require special carve-outs for Amazon and Netflix: unitary taxation, a measure that international tax experts have been calling for over a period of years. This involves a new tax on multinationals that reflects where economic activity really takes place and where value is created (rather than where revenue and profits are booked). It involves taxing a proportion of a multinational’s global profits that matches the UK proportion of their sales, labour, and operations. Analysis by Professor Sol Picciotto and Danny Bertossa suggested that UK implementation of a unitary taxation model could raises, on a conservative estimate, some £6 billion.

Economic analysis published during the first half of 2020 also supported fairer tax treatment of capital gains alongside income. Work by academics Arun Advani and Andy Summers showed that the top 1% are richer than has been previously thought, when capital gains are considered alongside income. The income share of the top 1% in 2017-18 was 16.8% when capital gains are accounted for as well as income; it was previously thought the top 1%’s income share in 2017-2018 was a more modest 13.8% (when taxable gains were not taken into account). Their report showed that the income share of the top 1% has grown twice as fast as previously thought since 1996-7 when capital gains are taken into account. Summers commented, “A lot of capital gains are, in fact, just repackaged income going to the already rich.” The obvious solution to this is a new approach that treats capital gains and dividends as income, rather than maintaining the artificial split between these forms of income in our tax system. Such an approach has been backed by moderate commentators such as the Institute for Fiscal Studies and IPPR. Estimates of the revenue raised vary significantly, but were estimated last yeara to raise £14 billion in the fifth year of operation, even accounting for behavioural change.

As we have learned that the top 1% are richer than first thought, and that many of the wealthiest have not been hard hit by coronavirus (and may have benefited), traction should also gather for the super-rich to pay a little more of their fair share. Restoring a 45p additional rate from £80,000 and 50p top rate from £125,000 would raise some £5.4 billion, taking into account behavioural response. Others have demanded a net wealth tax. A European proposal for a 1%-3% time-limited tax on the wealth of the top 1%, which would appear to raise significant revenue, could be adjusted for the United Kingdom. Wealth taxes are not unheard of in Europe – and exist in Spain, Norway, Switzerland, and Belgium – and, according to economist Gabriel Zucman, a wealth tax is “less likely to harm growth” coming out of a recession compared with austerity proposals. Wealth taxes are popular – a YouGov survey found 61% of the public would support a wealth tax on assets of over £750,000. A wealth tax could be phased in following the establishment of an asset registry, on which the Tax Justice Network has done considerable policy work.

Finally, it is essential that taxes are not avoided or evaded in the aftermath of the crisis when steps are taken to ensure that the wealthy pays their fair share. Action such as introducing a public register of trusts, greater transparency in the Crown Dependencies and Overseas Territories, a General Anti-Avoidance Rule (to replace the Government’s weak Anti-Abuse Rule), clamping down on enablers of avoidance and evasion, an increase in targeted audits by HMRC, scrapping non-dom status, public country-by-country reporting in the UK (on which the Government has dragged its heels), fair taxation of trusts, as well as an Overseas Loan Transparency Act could close loopholes, support international tax justice, and raise further revenue for public services in need of funding as the country emerges from recession. In particular, the under-resourcing of HMRC is a barrier to the achievement of tax justice: as of 2016, HMRC had access to 40% of resources available to it in 2000, with cuts to staff and offices as part of the ‘Building our Future’ programme decimating the department. Reversing these cuts is an urgent part of the tax justice agenda.


This crisis has focused our minds on inequalities across the United Kingdom. But it has also focused minds on what can be done if only political will exists and resourcing can be directed to serve people’s needs. To provide that resourcing, and to encourage greater political will, we must see progressive tax after the crisis not as theft or as a burden, but as a contribution to the society that we need to build again on better foundations. There has been some caution expressed about new taxes being introduced during the crisis. Timing for the introduction of tax changes should be considered carefully. But taxes can be conducive to growth, including by steering investment towards productive sectors of the economy; can contribute to the paying down of debt incurred as a result of large-scale investments to support public health during the coronavirus crisis; can restore progressivity in the system (which may have been hindered by some of the Government’s introduction of new reliefs during the crisis); and may be needed, simply as a matter of fairness, when some groups have increased their savings and wealth while others have suffered during the crisis. The crisis has seen large profits accrued from the luck and circumstances of this pandemic.

This position paper has recounted some of the injustices exposed by the crisis. It has then put on the table a series of changes – a windfall tax, a new tax on multinationals, fairer taxation of capital and dividends, more progressive income tax, the closing of tax loopholes – that we will all need to call for in the coming months. We need to take forward the work of UK Uncut, established after the financial crisis, which turned tax justice from being a dry subject for wonks and accountants into an area underpinned by a movement. An expanded tax justice movement after the coronavirus crisis is urgent and necessary.


  1. See, e.g., https://www.theguardian.com/commentisfree/2020/mar/29/coronavirus-means-we-really-are-finally-all-in-this-together.
  2. https://www.ifs.org.uk/publications/14773
  3. https://neweconomics.org/uploads/files/Covid_renting_final.pdf
  4. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/891116/disparities_review.pdf at p. 6.
  5. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/891116/disparities_review.pdf
  6. https://www.opendemocracy.net/en/oureconomy/wave-of-corporate-lawsuits-challenging-emergency-covid-19-measures/
  7. https://twitter.com/resfoundation/status/1270649405482254336
  8. https://www.theguardian.com/politics/2020/apr/03/john-mcdonnell-calls-for-wealth-tax-to-pay-for-coronavirus-measures
  9. https://www.bmmagazine.co.uk/news/uk-public-supports-windfall-taxes-to-claw-back-300bn-coronavirus-costs/
  10. https://www.bmmagazine.co.uk/news/uk-public-supports-windfall-taxes-to-claw-back-300bn-coronavirus-costs/
  11. https://www.taxjournal.com/articles/is-it-time-to-let-hmrc-loose-on-the-coronavirus-profiteers
  12. See https://prospect.org/coronavirus/its-time-to-revive-the-excess-profits-tax/#:~:text=Excess%20profits%20taxes%20are%20designed,was%20set%20at%2095%20percent.
  13. https://labour.org.uk/wp-content/uploads/2019/11/Funding-Real-Change.pdf
  14. https://labour.org.uk/wp-content/uploads/2019/11/Funding-Real-Change.pdf
  15. https://pop-umbrella.s3.amazonaws.com/uploads/1acfb317-6e5a-4273-b950-57b3ed085d6b_Taxing_Multinationals_PSI.pdf
  16. http://www.lse.ac.uk/News/Latest-news-from-LSE/2020/e-May-20/Capital-gains-reveal-extent-of-top-one-per-cent-income
  17. https://www.ifs.org.uk/budgets/gb2008/08chap10.pdf
  18. https://www.ippr.org/files/2019-09/just-tax-sept19.pdf
  19. https://labour.org.uk/wp-content/uploads/2019/11/Funding-Real-Change-2019.pdf
  20. https://labour.org.uk/wp-content/uploads/2019/11/Funding-Real-Change-2019.pdf
  21. https://voxeu.org/article/progressive-european-wealth-tax-fund-european-covid-response
  22. https://www.businessinsider.com/4-european-countries-wealth-tax-spain-norway-switzerland-belgium-2019-11?r=US&IR=T
  23. https://voxeu.org/article/progressive-european-wealth-tax-fund-european-covid-response
  24. https://www.ft.com/content/b7441bee-6bf7-46c2-ab75-916fec31f521
  25. See, e.g., https://www.taxjustice.net/2019/09/17/global-asset-registries-a-game-changer-for-the-fight-against-inequality-and-illicit-financial-flows/
  26. https://www.taxjustice.net/2020/05/06/uk-u-turns-on-commitment-to-tax-transparency-giving-up-10-billion-in-corporate-tax/. The Tax Justice Network writes that “the UK Treasury confirmed to Parliament in May 2020 that it has reversed its 2016 commitment to publishing the country by country reporting data at a national level, and is blocking the OECD from publishing the data at an international level.
  27. https://labour.org.uk/wp-content/uploads/2019/11/Fair-Tax-Programme-2019.pdf
  28. See Public and Commercial Services Union/Tax Justice Network, HMRC: Building an Uncertain Future – The Cuts Don’t Work (2016). Figures supplied by HMRC suggest that 17,000 years of staff experience have been lost through HMRC redundancies and departures; the department’s aim of reaching 50,000 staff by 2021 would give it half the total number of staff it had when the department merged in 2005.