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Richest must pay up for costs of climate crisis

19 November 2021

The current tax system damages the environment and perpetuates inequality, argues David Haslam

ONE thing that became crystal-clear in the COP26 negotiations was that tackling the climate crisis will cost a great deal of money, and that there is nowhere near enough on offer. It also became clear that the poorer nations have a strong case for reparations for “loss and damage” rather than loans, or even grants. There are three potential sources of funds: governments, corporations, and wealthy individuals — in particular, the one per cent.

Developed countries are, rightly, under pressure to deliver. A figure of $100 billion has been promised, although not yet provided. This increases the urgency for a return to the 0.7-per-cent UK aid commitment, with a focus on grants towards the damages of the past.

Companies are equivocal: they claim to be amending their investment programmes and business plans, but are not yet willing to produce the appropriate figures in their annual reports. Church investors have a part to play here.

In relation to individuals, the tax-justice movement is linking increasingly with the climate-justice movement to address both the alarms in today’s world: the climate emergency and increasing inequality. We need urgently a tax system that will show that all are contributing appropriately to both climate justice and human justice.


TWO years ago, at a consultation in South Africa, the World Council of Churches, along with the World Communion of Reformed Churches and the Lutheran World Federation, conceived the idea of a “Zacchaeus Tax”: a tax that the rich would pay in recognition of the way in which resources had been extracted from the poor over centuries. Even if they did not repay four times over, like Luke’s little tax collector, it would go some way to acknowledging history.

There is, unfortunately, little sign of willingness for reparations among the wealthy of today, although some are making philanthropic gestures. One group, however, bears some resemblance to Zacchaeus: the Patriotic Millionaires. They want to pay more tax, because they know that public services and the planet need the money. Recent research by their sister organisation, Partners in Progress, found that the wealth of UK billionaires had grown by 22 per cent since 2020, now totalling nearly £600 billion, and that, during the past year, the wealth of the 250 richest UK citizens had grown by £106 billion.

Church Action for Tax Justice was launched in April 2019 by the former Archbishop of Canterbury Lord Williams. Since then, it has linked with the “tax-justice family” in the UK — the Tax Justice Network, Tax Justice UK, Fair Tax Foundation, and others — to seek to add a moral and theological dimension to the tax debate. Its latest campaign for a wealth tax shows that the latest government tax policies, once again, favour the rich. They also damage the environment by continuing to freeze fuel tax, and cutting taxes on domestic flights.

To pay for health and social care, the simple extension of National Insurance to cover all income equally could raise £31 billion a year. Even better, the capital gains tax — a means by which the wealthy avoid tax — could have been brought into line with income tax. Recent analysis by Professor Arun Advani relating to the 540,000 richest individuals in the UK — the top one per cent — suggests that this would raise up to £16 billion a year. It is also the case that the carbon emissions of the one per cent are 30 times greater than the 1.5ºC target. Temptation needs to be removed.

The richest, of course, make liberal use of tax havens such as the Cayman Islands, Bermuda, and the British Virgin Islands — all British overseas territories, although the part played by the City of London also figures large. The Panama, Paradise, and, now, Pandora Papers have shown what the rich get up to. Registers of beneficial ownership are required urgently. The UK Government said, in 2016, that these registers should come into being, but tax-haven resistance is delaying it until 2023. MPs are currently pressing the Government to introduce an Economic Crime Bill that would end the purchasing of UK property to avoid tax.


IN RELATION to governments and corporations, campaigners have been pressing the Organisation for Economic Co-operation and Development and the G20 to bring in a global tax deal. There has been partial movement on this, with a multinational tax rate of 15 per cent, but research shows that this is far from adequate: there are many fudges in the small print, and countries such as Kenya, Nigeria, and Sri Lanka have refused to sign up.

The current global economic system is profoundly unfit for the current crisis. We live in a deeply sinful, even demonic, world. Salvation may lie in moving towards a fair and equitable tax system. If the majority of the wealthy — both individual and corporate — continue to be so resistant to following the example of Zacchaeus, and paying their fair share, governments — and the Churches — must help them. Besides closing the gap between rich and poor, a just and proactive tax system could provide resources to combat climate change.

The Revd David Haslam is a Methodist minister and a founder of Church Action for Tax Justice. This is an edited version of a talk that he gave to an ecumenical panel during the COP26 “People’s Summit”.


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