According to a new report from Tax Justice UK ASOS and Serco were among six companies across finance, outsourcing, retail, real estate, mining and pharmaceuticals which made £16 billion in excess profits during the pandemic.
The report “Pandemic Profits: who’s cashing in during covid” shows that a number of companies saw their global profits leap during the last 18 months. The profits of one company, the Scottish Mortgage Investment Trust, were up 801% compared to previous years.
The report argues that these companies are examples of a broader trend where some companies benefited from government pandemic spending, while others were well placed to profit from economic changes that have been accelerated by covid.
Tax Justice UK Executive Director, Robert Palmer, called on Chancellor Rishi Sunak to consider a windfall tax on excess profits made during the pandemic among a string of measures in his forthcoming Budget.
He said: “The covid pandemic has been unprecedented in its impact. Not only did it cause a recession that saw the wealthiest grow richer, whilst others struggled, it also resulted in some companies making what appear to be unprecedented profits.
“We need a tax system that supports a fair recovery and keeps up with the economic changes accelerated by the pandemic. Many people have been hammered by covid, it is only fair to expect those who have prospered to contribute more to the economic recovery. A windfall tax should be part of the mix.”
The report analysed the profits made by six companies during 2020/21 and compared those to profits made in previous three years.
It recommends that the Chancellor:
● Introduces a one-off windfall tax on pandemic profits made during the pandemic,
● Increases the main rate of corporation tax to 25% immediately and closes corporate tax breaks that don’t work, and
● Equalises the taxation of capital gains and income.
The report shows that the six companies examined in the report made excess global profits of £16 billion from April 2020 to March 2021 compared to their average profits from the previous three years. A Pandemic Profit Levy of 10% on their global profits could raise up to £1.6 billion from these companies alone, and a 50% levy could raise up to £8 billion.
An increase in corporation tax to 25% would raise around £20 billion a year, while the government’s Office For Tax Simplification estimates that aligning capital gains tax with income tax rates could raise up to £14 billion a year for the exchequer.
Read the report.