Alex Dunnagan

TaxWatch director gives evidence at House of Lords

6th November 2020 by Alex Dunnagan

On Monday 26 October our Executive Director George Turner gave evidence to the Finance Bill Sub-Committee of the House of Lords, with regards to disguised remuneration and the draft Finance Bill 2020-2021. Greg Sinfield, President of the First-tier Tribunal (Tax Chamber), and Malcolm Gammie QC, of the Institute for Fiscal Studies, also contributed evidence during this session.

Asked how easy it was to find disguised remuneration schemes, Mr Turner responded that after reading HMRC’s Spotlight which looked at tax avoidance promoters targeting NHS workers,¹ he carried out a “secret shopper” exercise, and that a simple Google search revealed links to professional companies trading in these schemes. Mr Turner said it was “a myth” that there were just a few obscure or black market operators of such schemes left, “acting from above a chip shop or something”. “The reality is that these are very highly professional organisations. I was looking for mass-marketed tax avoidance schemes. They need to contact consumers and drum up business somehow, so it was depressingly easy to find these companies.”

After giving his details and posing as a high paid employee, he was given a callback within an hour from one company and was advised he could keep 83% of his earnings tax-free if he signed up to their scheme. The scheme was described as a “split payment”. “Basically, your employer would contract with the agency or whichever provider it recommended. You would be paid minimum wage or thereabouts, which would attract no income tax charge or a very, very small one. Then the balance of your payment would be given as an employee advance, as they called it in this case, based on future profits. It was said to me that this was exactly how John Lewis employees were paid, which was a clear and transparent lie.”

Mr Turner told the sub-committee that he received marketing material, which he has handed over to HMRC, that stated that the schemes were in line with the latest HMRC rules. This was was “categorically not true”.

He has since been subject to targeted advertising promoting tax avoidance schemes.

Mr Turner said that these schemes are fraudulent in that there is “fraud against the user who is provided with all sorts of fake assurances” and that there’s a further fraud “against the revenue in the way that these schemes are constructed”.

When asked is it possible for an individual to sign up without knowing its fraud, Mr Turner said that it is understandable that some users might sign up to a scheme if they are provided reassurance by their employer and the scheme seller. In one instance, an individual reached out to TaxWatch saying that they had signed up with a company which told its clients that it was paying taxes on their behalf, but actually, the provider was keeping the supposed tax bill for itself.

Mr Turner continued, telling the committee that “there is zero possibility that HMRC don’t know who these people are and what they are doing”, before going on to suggest that the sellers of these schemes should be prosecuted for fraud. “Research done by Kantar earlier this year on behalf of HMRC found that the 20 so-called hardcore promoters had been engaged in this practice for many years and were all well known to HMRC. It is frankly an absolute scandal and an indictment of the performance of HMRC that these things have not been shut down.”

Questioned by Baroness Bowles as to what HMRC had done after TaxWatch had reported these schemes, Mr Turner said that following submitting evidence he had heard nothing back. Mr Turner went on to say that while HMRC has done a lot of work on disguised remuneration schemes, what they haven’t done is “the one thing that would be truly effective, which is simply to apply the criminal law”, and that “if HMRC were to bring successful prosecutions for fraud, it would be able to pursue these people under proceeds of crime legislation and recoup substantial amounts of money for the Exchequer.”

Mr Turner highlighted that there is often a perception in the UK that tax avoidance is lawful, with promoters playing on that misunderstanding, and that influential members of the law profession have been involved in disguised remuneration schemes. He went on to highlight to the sub-committee that “there are senior barristers who advise on these schemes and they need to be held to account as well”, and that “just because someone wears a wig, it doesn’t make them any different from someone who wears a balaclava.”

At TaxWatch we have previously submitted evidence to HMRC calling for those who sell disguised remuneration tax avoidance schemes to be investigated for tax fraud, and written to the Economic Crime Unit of the City of London Police, calling on the department to open an investigation into sellers of these schemes for defrauding their clients.

The debate is available on Parliament Live here.

Photo by Recal Media from Pexels

1 Tax avoidance promoters targeting returning NHS workers (Spotlight 54), HMRC, 30 March 2019, https://www.gov.uk/guidance/tax-avoidance-promoters-targeting-returning-nhs-workers-spotlight-54

No Time To Pay Tax?

18th October 2020 by Alex Dunnagan

The UK companies behind the James Bond films have minimised tax for decades whilst receiving tens of millions of pounds in subsidy from the UK taxpayer.

TaxWatch’s latest report – No Time to Pay Tax? – delves into the accounts of EON Productions Limited and its associated companies (EON). We found that despite Skyfall and SPECTRE grossing just shy of $2bn at the box office, EON generated small profits and smaller tax bills in most years whilst profits in the hundreds of millions are declared overseas.

In recent years, the UK group of companies headed by EON Productions Limited has declared a pre-tax loss, while simultaneously receiving tens of millions of pounds in tax credits via the UK’s creative industry tax relief scheme.

International tax rules state that profits should be allocated based on where value is created, with tech companies often using this argument to explain why they only pay taxes in the US. If this is the case, why isn’t a significant amount of tax paid on the profits of Bond films in the UK?

Find out more in our latest report here.

A PDF version of our report is available here (printer-friendly version here)

This research was featured in The Observer and the Mail on Sunday among others.

Image by Glen Ratcliffe

TaxWatch to HMRC: Prosecute sellers of disguised remuneration schemes

2nd October 2020 by Alex Dunnagan

TaxWatch Executive Director, George Turner, has written to HMRC calling for those who sell disguised remuneration tax avoidance schemes to be investigated for tax fraud. We have previously written to the Economic Crime Unit of the City of London Police, calling on the department to open an investigation into sellers of these schemes for defrauding their clients.

HM Revenue & Customs is holding a consultation and has asked for views on ways to tackle future use of disguised remuneration tax avoidance. The consultation sets out an array of rules that HMRC has introduced in recent years in an attempt to restrict the ability of promoters of tax avoidance schemes to operate effectively.

However, these measures stop short of the one thing that HMRC could do to effectively shut down the sale and marketing of these schemes – the application of existing criminal law to prosecute those who design, operate, and promote dishonest tax avoidance schemes.

There is a myth that appears to have taken hold that the promoters of tax avoidance schemes have done nothing wrong, and that the promotion of a tax avoidance scheme is “not against the law”.

However, under the law, where someone is involved in the promotion or operation of a tax avoidance scheme that is dishonest, criminal proceedings can be brought against them. This was demonstrated in the case of R vs Charlton, when the Crown successfully brought a prosecution against three accountants and a barrister for their roles in the design, operation and promotion of a failed tax avoidance scheme. All of the defendants received custodial sentences.

HMRC’s characterisation of the activities of the promoters of disguised remuneration schemes, which includes “trying to hide their activities from HMRC by not complying with their legal obligations to disclose their scheme”and “ignoring or only partially answering HMRC enquiries”, clearly fit the circumstances under which HMRC should open a criminal investigation under their criminal investigations policy.

Despite this, criminal investigations have been rare, and we are unaware of any promoter being successfully prosecuted for tax fraud.

The letter also highlights the importance of criminal prosecution in order to protect the public from exploitation by dishonest promoters. Users of disguised remuneration tax avoidance schemes often end up being the victims of fraud themselves, with scheme promoters providing knowingly false and misleading information about the legality of these schemes in order to persuade people to join them. However, whilst scheme users have been actively pursued by HMRC, relatively little has been done to confront the lawyers and tax professionals who created the problem in the first place.

The full evidential submission can be found here.

This research was featured in Contractor UK and the Yorkshire Post

Photo by George Turner

Parliament forces Netflix to respond to TaxWatch research

24th September 2020 by Alex Dunnagan

Netflix has agreed to respond to TaxWatch’s investigation into the company’s tax affairs after a request from the Digital, Culture, Media and Sport (DCMS) Committee. Our report revealed that the TV giant had streamed up to $430m of profits into offshore tax havens in 2018 (we have since published a follow up bl og post taking into account 2019 figures). This research into Netflix’s tax affairs has previously been the subject of an adjournment debate in the House of Commons.

The DCMS are currently holding an inquiry into ‘The future of public service broadcasting’, and on Tuesday 15 September held a formal meeting in which senior Netflix executives Benjamin King, Director of Public Policy UK and Ireland, and Anne Mensah, Vice President of Original series, participated.

During the oral evidence session the Labour MP for Cardiff West, Kevin Brennan, put our report to Mr King, in saying:

“the revenues from subscribers in the UK in 2018 for Netflix was £860 million, yet Netflix pays very little tax in the UK because that money is credited to a Dutch company….What is your response to that issue about the way in which Netflix is structured allegedly to avoid paying tax in the UK?”

Mr King responded:

“I would like to start by emphasising that we do pay all the tax that is required of us under UK law and every other jurisdiction that we operate in. Our accounts from 2018, which is our most recently published set, showed that the operating profit we made across our entities at that time was offset under HMRC’s group relief regime rules by the losses that we made on certain of our productions.”

Mr King went on to say that because Netflix’s European Headquarters is in the Netherlands, profits from the UK “are taxed in the Netherlands, which is completely in accordance with international norms”.

Mr Brennan asked if there was any truth to the allegation that Netflix is intending to take advantage of High End TV Tax Relief in the UK while not paying any profit here. Mr King responded that there were “a great many inaccuracies” and “false assertions in the TaxWatch report that we noted at the time of publication”, to which Mr Brennan questioned why Netflix did not respond to TaxWatch’s initial request for comment prior to publication.

Mr King stated that “we were not consulted on the detail of the calculations”.

As TaxWatch has now set out in a letter to Mr King, this is incorrect. TaxWatch contacted Netflix posing a number of questions that arose out of our investigation, while setting out in detail our calculations and research in advance of the publication of our first report in January 2020. We made it clear that we were contacting Netflix to allow for the opportunity to raise any factual issues and to provide a comment in advance of publication.

In a subsequent phone call with a representative of Netflix, TaxWatch’s Executive Director George Turner made it clear that we would be happy to correct any inaccuracies in advance of publication if Netflix provided us with the disputed details.

We were assured we would receive a full response to our request for comment, however, after several days of no further contact, Netflix told us that the company had decided not to respond.

For that reason we were surprised to see the claims made about our research at the committee hearing.

Mr Brennan pointed out that Netflix were given an opportunity to respond, and asked if Mr King wished to make a comment during the committee proceedings. Mr King stated that he did not have TaxWatch’s report in front of him, and repeated the claim that there are “certainly a great many inaccuracies in the report”. When pressed further he agreed that Netflix would provide a written response.

We have since re-sent our report and initial correspondence to King in order to assist with Netflix’s response to the DCMS.

A transcript of the session is available here, with video footage is available here. Reference to TaxWatch’s research begins at 1059hrs.

This story was reported in Deadline.

Photo by cottonbro from Pexels.

TaxWatch calls on City of London Police to investigate fraudulent tax schemes

19th August 2020 by Alex Dunnagan

TaxWatch is calling on the Economic Crime Unit of the City of London Police to open a fraud investigation into the promoters and marketers of disguised remuneration tax avoidance schemes.

Recent press reports have revealed that disguised remuneration tax avoidance schemes continue to be marketed to the public, including the direct targeting of NHS workers during Covid-19 pandemic. These schemes are marketed as “lawful” means of reducing a tax liability despite very clear legal rulings to the contrary.

The fraudulent marketing of schemes leads to contractors handing over substantial fees to dishonest tax advisors on the false belief that what they are doing is lawful.

However, when the schemes inevitably fail, users will be left with crushing financial losses.

Writing to the Economic Crime Unit, Director of TaxWatch George Turner said:

“Now that the legal position on the taxation of disguised remuneration schemes is crystal clear, anyone continuing to design, market, and promote loan schemes can not be doing so in the honest belief that these are anything other than unlawful attempts to evade tax.”

“Promoters continue to perpetrate these schemes because they are able to generate very significant fee income from scheme users, and if HMRC challenge these schemes, the users, and not the promoters, will be held liable for the taxes owed.”

“These schemes are an economic crime which cost the Treasury hundreds of millions a year. Until the promoters of fraudulent tax schemes are prosecuted, they will continue to ruin lives.”

The full text of the letter can be found here.

This was reported on in Law360, Computer Weekly, and Contractor UK.

Photo by Bruno Martins on Unsplash

Rogue Landlords

5th August 2020 by Alex Dunnagan

Up to £1.73 billion a year in tax is being dodged by unscrupulous landlords. The new figures are revealed in a report by TaxWatch, and suggests that levels of non-compliance have exploded since 2010, the last time that HMRC published official figures on the scale of evasion in the buy-to-let sector.

In that year, HMRC estimated the amount of tax lost to residential landlords not declaring their income was £540 million.

The report recommends that the government introduce a national register of rental properties to improve tax compliance in the buy-to-let sector.

Read the full report here.

This research was featured in Vice, the Mail on Sunday, Law360, and Tax Notes International among others.

Photo by Ethan Wilkinson on Unsplash

General Electric tax fraud allegations revealed

4th August 2020 by Alex Dunnagan

A new report published by TaxWatch today reveals the serious allegations of fraud being levelled against a major US corporation by HMRC.

The full report, titled “Around the world with $5bn: General Electric and the Australian arbitrage” details how General Electric moved $5bn between the US, Luxembourg, the UK and Australia in just four days as part of a complex “hybrid arbitrage” tax avoidance scheme, that allegedly generated a tax benefit for GE in the UK of up to £760m over a period of 10 years. The report is based on a series of court documents that have emerged as part of the dispute between the company and the tax authority.

According to HMRC’s claim, GE were only able to gain the tax benefit after they knowingly withheld information from the tax authority in an attempt to defraud the British taxpayer.

This included deleting key passages from the minutes of a board meeting in order to hide the true extent of the tax avoidance scheme.

GE strongly denies the allegations, and says that the entire scheme was presented to HMRC in discussions with the tax authority at the time.

HMRC’s allegations of fraud were made as part of a recent amendment to ongoing litigation between the tax authority and GE. GE sought to challenge HMRC’s right to amend their case to include allegations of fraud.

A recent High Court Judgment by Mr Justice Zacaroli confirmed that two of HMRC’s allegations of fraudulent misrepresentation had no chance of being proved, in part because of the time that had passed since the acts took place. A third allegation, fraudulent misrepresentation on the basis of knowingly failing to disclose relevant documentation, was allowed to proceed to a full trial. The case is scheduled to be heard in court in 2021.

The full report can be found here.

This research was featured in the Financial Times, Accountancy Daily, and the Australian Financial Review among others.

Cruising for a bailout

17th July 2020 by Alex Dunnagan

The cruise ship industry was an early casualty Covid-19, with all major cruise operators being forced to halt their operations.¹ This has hit the industry hard, with share prices in the largest cruise companies dropping by over 50 per cent compared with this time last year.

The impact of the virus on the industry became the first flashpoint in the debate about which companies should get state support. Following fierce debate in the United States over whether their decades long use of tax havens should disqualify them from receiving support, it appears that the industry can not access Federal support under the CARES Act. However, with little fanfare, the Bank of England has loaned £325m at low interest to the two largest cruise lines. both of which are renowned for their use of tax havens.²

Cruising for a tax deduction

By incorporating in places such as Panama (Carnival Corporation) and Liberia (Royal Caribbean Cruises), and registering ships in countries such as the Bahamas, as well as making use of a number of generous tax exemptions, cruise ship companies are able to avoid tax and are held to lower standards on health, safety, the environment, and labour rights.

A report by The Hustle calculated that the major cruise lines, all with a significant presence in Florida yet incorporated offshore, paid an average tax rate of just 0.8 per cent.³ A recent investigation by Business Insider found staff on cruise ships working long hours for as little as $500 a month.⁴ Carnival Corporation & Plc has recently been fined $20m for dumping sewage and plastic waste into the ocean, while falsifying records of incidents.⁵

America to the rescue?

In the US, President Trump has praised the cruise industry , calling these offshore companies “a great US business” during a press conference.⁶ The President has had a long association with the industry. Micky Arison, chairman of Carnival, is a personal friend of Trump and helped sponsor his reality show “The Apprentice”.⁷

Not everyone agrees with Trump’s analysis of the industry. Peter DeFazio (D-Ore.), chairman of the Transportation Committee, commenting on the industry’s request for a bailout has said “they aren’t American”, and “They don’t pay taxes in the United States of America. If they want to re-flag their ships … and pay U.S. wages and pay U.S. taxes, then maybe.”⁸

Despite the President’s fondness for the industry, it appears that it does not qualify for relief under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). As companies must be certified as “created or organized in the United States or under the laws of the United States” as well as having “significant operations in” and a majority of employees based in America.⁹ Despite all the major players having a presence in Florida, this effectively rules them out. ¹⁰

Carnival Corporation’s annual 10-k filing goes as far as to state that “…substantially all of Carnival Corporation’s income is exempt from U.S. federal income and branch profit taxes”, due to the fact that Section 883 of the Internal Revenue Code exempts “income derived by a corporation organized in a foreign country.”¹¹ ¹² Norwegian said in its most recent annual filing that under “current Bermuda law,” where it’s incorporated, the company is “not subject to tax on income and capital gains.”¹³

British bailouts

In a similar fashion to President Trump, the British Prime Minister has recently referred to the cruise industry as “a great, great British industry”, stating that the UK “will support it in any way that we can.”¹⁴ Though the rhetoric is the same, while the US isn’t bailing out the cruise industry, the UK is.

On 04 June, the Bank of England announced that £25m in Covid Corporate Financing Facility (CCFF) loans had gone to Carnival Plc, a British company that is ‘dual listed’ with the Panama incorporated Carnival Corporation.¹⁵ A dual-listed company is a corporate structure wherein two companies function as a single business. ¹⁶

On 25 June it was revealed that RCL Cruises Ltd, better known as Royal Caribbean Cruises, had received £300m in CCFF loans.¹⁷ Royal Caribbean does have a headquarters in the UK (along with one in Florida), but the ultimate owner is RCL, a company incorporated in Liberia in 1985.

In 2019, Carnival PLC declared profits of $1.2bn and faced a tax liability of just $40m. In 2018, the latest year that accounts are available, RCL Cruises Limited declared $226m in profit and received a tax credit of $59m.

We have written about how countries around the world have sought to exclude companies registered in tax havens from receiving government support, in our report, Paying in Equally. The cruise ship industry provides one powerful example of how the UK has taken a relatively easy-going approach to which companies qualify for government support. But with calls growing to place restrictions government bailouts, will the UK government’s support for the cruise ship industry be sustainable?

This research featured in The Times and Skift.

Photo by Morning Brew on Unsplash

1https://www.theguardian.com/world/2020/mar/27/stranded-at-sea-cruise-ships-around-the-world-are-adrift-as-ports-turn-them-away

2https://www.theguardian.com/world/2020/mar/27/stranded-at-sea-cruise-ships-around-the-world-are-adrift-as-ports-turn-them-away

3https://thehustle.co/the-economics-of-cruise-ships/

4https://www.businessinsider.com/cruise-ship-workers-reveal-how-much-money-they-make-2019-5?r=US&IR=T

5https://www.ft.com/content/0eac4946-8644-11e9-97ea-05ac2431f453

6https://www.washingtonpost.com/travel/2020/03/13/trump-offers-support-cruise-lines-during-coronavirus-outbreak-while-asking-them-stop-sailing/

7https://www.washingtonpost.com/politics/coronavirus-pandemic-tests-clout-of-cruise-industry-and-its-long-standing-ties-to-trump/2020/03/12/3f79a1ba-63aa-11ea-912d-d98032ec8e25_story.html

8https://www.politico.com/news/2020/03/11/coronavirus-cruises-126426

9https://www.whitecase.com/publications/alert/us-cares-act-relief-available-us-subsidiaries-european-companies

10https://www.politico.com/news/2020/03/11/coronavirus-cruises-126426

11https://www.carnivalcorp.com/sec-filings/sec-filing/10-k/0000815097-20-000003

12https://www.law.cornell.edu/uscode/text/26/883

13http://www.nclhltdinvestor.com/static-files/ebce2e02-cf0d-42ce-b3f6-4c91efcd3c9a

14https://www.telegraph.co.uk/travel/cruises/news/boris-johnson-british-government-support-cruise-industry/

15https://www.bankofengland.co.uk/markets/bank-of-england-market-operations-guide/results-and-usage-data

16https://www.travelweekly.com/Cruise-Travel/Saudi-Arabia-buys-a-piece-of-Carnival-Corp

17https://www.bankofengland.co.uk/markets/bank-of-england-market-operations-guide/results-and-usage-data

Tax havens, tax avoidance, and government support for businesses during the coronavirus pandemic

9th May 2020 by Alex Dunnagan

Following controversy over the prospect of taxpayer funds being made available to support companies with a history of tax avoidance, there have been calls in the UK and around the world to exclude companies based in tax havens from accessing government support.

Whilst such eye-catching policies are popular, they are likely to be ineffective, according to TaxWatch’s latest report Paying in Equally?

Instead, our report suggests a package of reforms aimed at meeting the government’s goal of ensuring that all who benefit from state support pay in on an equal basis. This includes:

Making tax exiles liable for dividend income tax on profits derived from UK based companies.
Making government support for business repayable if a company is found to be engaging in tax avoidance.
Creating a list of companies ineligible for state support due to involvement in tax avoidance (regardless of whether that avoidance uses a listed tax haven).
Invest resources into tax enforcement to ensure better compliance with anti-tax avoidance legislation.
Mandate the publication of tax data by large, multinational companies.
Making data available to the public on which companies are accessing support schemes and on what terms.

To read the briefing in full, please click here. A PDF version is also available here.

This report has been covered in The Times, Law360, and Tax Notes International among others. Our Director has published an op-ed on the issue in the New Statesmen, and has been interviewed on talkRADIO.¹

Photo by Edwin Hooper on Unsplash

1The interview on the Alexis Conran shows is at 1145hrs on Sunday 10 May 2020.

Wars, taxes, and excess profits

1st May 2020 by Alex Dunnagan

“The profiteering that cannot be got at by the restraints of conscience and love of country can be got at by taxation.” – US President Woodrow Wilson, 1918.¹

World leaders are using wartime rhetoric in describing the current crisis. Emmanuel Macron has declared that “we are at war”, Donald Trump has referred to the virus as an “invisible enemy”, and Boris Johnson has declared that “we must act like any wartime government and do whatever it takes to support our economy”. This language is not hyperbole.

But what does a wartime government do to support its economy? History shows us that wartime economies often bring with them radical tax innovations. Income tax was first introduced in the Napoleonic Wars, and the PAYE system (pay as you earn) was introduced in the Second World War. In this crisis we have already seen the tax system thrown into reverse to create the Furlough scheme.²

One tax that has featured in previous wars is the excess profits tax, which economists Emmanuel Saez and Gabriel Zucman have argued should be imposed by the US Federal Government as part of the response to the current pandemic.³ They rightly note that while many businesses will suffer, some will see profits increase.

In this article we take a look at what governments did in the past in relation to excess profits taxes – and how these taxes operated in practice.

In the First World War the British government saw that certain industries were doing well out of the conflict, particularly the arms manufacturers, and introduced an excess profits tax of 50 per cent of profits above the normal pre-war level. The rate was raised to 80 per cent in 1917. In 1921, the then Chancellor of the Exchequer Austen Chamberlain terminated the excess profits duty.

An excess profits tax is a tax levied on profits in excess of what is considered “normal”. While every iteration of this form of tax has been slightly different, the general rule is that an average from a pre-war period is taken. For example, Canada’s World War Two excess profits tax exempted “normal” profits taken as an average between 1936 and 1939.⁴ Administered under what is known as the “war-profits principle”, this tax is designed to recapture wartime increases over normal peacetime profits.

Various different rules and exemptions have been made in the past, for matters such as the size of the business, if the income is derived from investments, or to allow for depreciation of assets. In the First World War, in the UK a deduction of £200 per annum was allowed in the case of every business, which was subsequently increased in the case of small businesses. Administration of this tax went without serious friction, with taxpayers considering it part of their patriotic duty.

The UK wasn’t alone in introducing an excess profits tax during the Great War. Australia, Canada, New Zealand, South Africa, France, Italy, and the United States of America all introduced similar taxes. The goal was the same – to help pay for the war, and to ensure that no one outrageously benefited from a situation in which the country at large suffered.

Throughout the Second World War the excess profits tax was reintroduced. The debate in Parliament throughout the war was not over whether there should be an excess profits tax, but if the tax should stand at 100 per cent or not.

During his 1941 Budget speech, the then Chancellor of the Exchequer, Sir Kingsley Wood, stated that “The yield of National Defence Contribution and Excess Profits Tax exceeded the estimate of £70m by no less than £26m”, and that “The large surplus is due mainly to the public-spirited manner in which many firms and companies have paid over the estimated tax due from them without waiting for the figures to be finally agreed.”⁵

Wood went on to explain that the measure “is directed primarily to taking the profit out of war and ensuring that in war-time, when the whole nation has to bear sacrifices, the increased production which the war requires will not become the means of enrichment that it did in the last war.”⁶

Taxation to pay for war has been fairly popular so long as the war in question is popular too. Once you unite the people in a common cause, they have historically been quite happy to pay for it. Covid-19 is not a war of choice. If governments wanted to introduce measures such as excess profits taxes, it is likely that they would face little opposition from the public.

Photo by A Perry on Unsplash

1US President Woodrow Wilson, Session of 65^th Congress, 27 May 1918.

2Coronavirus: Employment Support, House of Commons, 19 March 2020, https://hansard.parliament.uk/Commons/2020-03-19/debates/A72357FF-0207-4CE1-A3EF-B5F2D5AE5089/CoronavirusEmploymentSupport

3Jobs Aren’t Being Destroyed This Fast Elsewhere. Why Is That?, Emmanuel Saez and Gabriel Zucman, The New York Times, 20 March 2020, https://www.nytimes.com/2020/03/30/opinion/coronavirus-economy-saez-zucman.html?action=click&module=Opinion&pgtype=Homepage

4Canadian Economist Alex Hemingway has recently called for an excess profits tax – Excess profits tax needed to prevent profiteering amid COVID-19, Policy Note, 09 April 2020, https://www.policynote.ca/profits-tax/

5Budget speech, 07 April 1941, https://hansard.parliament.uk/Commons/1941-04-07/debates/047d6100-7faf-4924-bfba-2152f9a19d7b/ReviewOf1940%E2%80%9341

6Ibid

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