Time for a Corporate Responsibility Levy?

We are witnessing a long-term trend for wealth to be within the control of super-rich individuals and large corporations.

I remember when the Liberal Democrat manifesto was an extra 1% on Income Tax, earmarked for education. It then now 1% on Income Tax, earmarked for the NHS. The problem with such a policy is that it requires the voter to behave in an altruistic way. It may make sense, it may be socially responsible, it can be espoused in a self-righteous way, but when a swing voter steps into the booth to put an X in the box, many factors can influence that last-minute decision.

“Do I really want to pay more tax?”

“Do I have faith in politicians that this money that I’ll be losing will make any difference?”

“It’s 1% today, what’ll it be next time?”

“Despite what I might’ve said down the pub, no-one will ever know which box I’ve ticked.”

Of course many people will vote tribally, being dyed-in-the-wool for one particular party, regardless of its record or the personal characteristics of the candidate. Yet we know that over time there are trends, different electoral outcomes, different governments. So the swing voter matters.

I would argue that putting this extra moral dilemma onto the swing voter is counterproductive to our electoral hopes. You don’t ask turkeys to vote for Christmas.

Our manifesto pledge on the British Business Tax, replacing Corporation Tax, was a good idea. It also addressed the problems of tax havens, and tax avoidance. As a result of COVID-19, the public focus is on the NHS – how critical it is to us, along with social care, and how the charity sector – supporting some of our most vulnerable people – has financially collapsed during this crisis.

How about we take the British Business Tax further? Let’s dump the moral dilemma of asking hardworking families to forgo more of their income for the common good. Many have been stretched to breaking-point already, turning to foodbanks as their income shrinks or vanishes altogether.

I propose a 2% Corporate Responsibility Levy on the British Business Tax – which the enterprise can choose how to allocate amongst qualifying UK-registered Care Homes, Charities and the NHS. All enterprises would be required as part of their Annual Statements to provide a Corporate Responsibility Statement, describing their choices and the effects those funds have had. This would also serve to boost the profile of many British companies in the public eye, and raise greater respect for their endeavours and profitability. Employees would know that, no matter where they work, when they go to work each day their efforts would for the common good. Before profits are divided among shareholders as dividends, this 2% would be guaranteed to the social causes that we – and the public – care so much about.

* Adrian May is a member in Edinburgh

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7 Comments

  • the only way forward for this nation is to modify the voting system

  • Eric, your concern about the voting system is one that I believe is shared among all Liberal Democrats. Sadly, it looks like the only way we would ever achieve that is to raise our profile and popularity with the public, increasing our influence, and we do that by having viable policies that resonate with their view of the country.

  • william francis 13th May '20 - 1:36pm

    Why not just tax land instead? Most of the increase in wealth inequality, has been down to rising land values ans half of the nations wealth is tied up in land.

  • Hi William, that will certainly be some people’s view – ‘take from the rich and give to the poor’. I know that in some cases, just because one has a large estate, it doesn’t mean that the estate generates much income. Yes, it’s an asset, but there will be a lot of factors – people, investment, good management, sustainability and effort – to make that happen. That’s why the approach I suggest is effectively taking some of the profits generated (whatever the source) and using that for the common good. Productivity is still encouraged, and profit from effort is not despised.

  • Will Bezzant 13th May '20 - 2:20pm

    Land Value Tax is so good because it’s the only tax that doesn’t discourage productivity- you can improve what is on the land, and not pay any more taxes

  • David Brandwood 13th May '20 - 9:10pm

    It’s not just a modification to the electoral system that’s needed, it’s replacement by STV. (This is already LD policy). It is also not just up to us – there are many allies, though two very large opponents. In particular, the Electoral Reform Society would be with us, as well as a number of parties – the Greens, the SNP, UKIP(!) for a start. Not all of these would necessarily support STV (by far the best system, overall) but we should stick with it (with ERS support). We also have supporters in the larger parties – CAER (Conservative Action for electoral reform) and LCER. The policy should certainly be in our manifesto, but it would be better if the campaign were not party led. We also have support in that the system is used in Ireland (North and Republic) and Scotland (except for Westminster) so is not untried in the UK. We (all of us, not just LD) need to build support over a long term ….

  • Peter Hirst 14th May '20 - 2:33pm

    Make Votes Matter is campaigning hard for electoral reform in Westminster. We must be prepared to compromise to gain cross Party support and encourage our members to campaign on its behalf. Longer term we need a new constitutional settlement with the British people that restores the level of trust needed to combat global issues that require it.

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