The central principle of progressive taxation – the more you earn the more you can afford to pay – has been broken down over the last few decades. Now some of the richest people in society pay a lower proportion of their income in tax than some of the poorest.
One of the key ways this is done is using tax havens such as Jersey or the Cayman Islands, which allow rich individuals and multinational corporations to escape paying their fair share to the exchequer. The UK loses around £18 billion to tax havens each year, while poor countries lose up to ten times that much. If the tax system can be fixed, we could avoid deep spending cuts in the UK and take a giant step towards a world without extreme poverty.
A new report just launched by War on Want, the trade union PCS and the Tax Justice Network details just how to do that. The report recommends a number of measures that would begin to unwind the complex and highly profitable tax dodging industry.