Azaad Sadiq
The Covid-19 pandemic has upended the global economy, and several British companies have felt this impact. In the past few days, Debenhams has gone into administration, while Richard Branson, CEO of Virgin, has requested financial aid from the government. On the one hand, such a request is understandable, given that Virgin Atlantic forms an important part of the wider Virgin Group. Like many airlines, it is facing potential bankruptcy in the wake of the pandemic, as demand for air travel has collapsed and the likelihood of a global recession becomes all but inevitable.
On the other hand, it may seem odd that Branson has requested any sort of loan from the British government, let alone loans for “hundreds of millions of pounds” (Topham, 2020), as the Virgin Group is registered in the British Virgin Islands, an Overseas Territory of the UK, and as such is domicile there for tax purposes. It so happens that the Virgin Islands are considered a tax haven where the only high rate is that of financial secrecy (Peat, 2019). For many, requesting a handout from the system you have taken active steps not to pay into reeks of hypocrisy.
It certainly is hypocritical, but it is also a human rights issue. Vital socioeconomic rights such as the rights to shelter, food security and healthcare, among others, rely upon a functioning state apparatus in order to be guaranteed, especially for the victims of economic inequality who cannot access the private sector for these essential services. These services need to be financed, and the means of financing them runs through the tax system. If companies actively avoid paying taxes, they are undermining the state’s ability to provide essential services for citizens, and thus are undermining these citizens’ socioeconomic rights.
Many of us may feel cynical about nations and governments as being barriers to human rights (traditional civil liberties being negative rights- i.e. rights that the government upholds by not acting in an authoritarian function). However, fantasies about self-governing communities are unlikely to come to fruition in the short term, and at present governments remain the best tool to ensure that positive socioeconomic rights (ones which the government must take active steps to guarantee) are realised. The NHS, for example is an institution that allows Britons regardless of income to access free healthcare and realise their rights towards good health. The NHS is also a particularly harrowing example of the dangers of underfunding amid the current pandemic.
At the time of writing, over 6000 people have died from COVID-19 within the UK. In hospitals across the country, the same concerns over shortages of ventilators, hospitals beds and PPE equipment for health workers are being echoed, and these shortages are symptoms of the chronic underfunding of the NHS, which has had deadly consequences during the pandemic. As the UK gets closer to a predicted peak, these problems will worsen, with ominous warnings that 102,528 beds will be needed for patients by the 18th of April – even though only 17,765 would be available (IHME, 2020).
These shortages in hospitals, on the frontlines of where the pandemic is being fought, reveal the precarious state of the NHS. Even with £2.9 billion of emergency funding provided to the NHS and local authorities to help free up hospital beds (Boseley, 2020), the precarity remains. One can only imagine how much worse the situation would be without this funding. Of course, the shortages of adequate equipment, as well as other cost related problems at the NHS, have been present for a long time, and despite the then Coalition government’s promises of ring-fencing the NHS from austerity imposed cuts, it is clear that the NHS has had to grapple with reduced long term financial assistance for just short of a decade. The only difference now is that so many more will die as a result of these financial handicaps, a tragedy that will be exacerbated by Coalition and Conservative governments sparing companies from the crushing discipline that they meted out to ordinary citizens and essential services.
While it is the companies that wilfully commit tax avoidance to maximise their profits, governments that choose to ignore or even silently support their conduct have enabled their behaviour. Scandals such as the leaks of the Panama and Paradise Papers have not resulted in meaningful action being taken by the government to deal with tax havens, with outdated and toothless laws not being updated to tackle the issue (Hopkins, 2017). While it may seem crass to politicise any aspect of the government’s response to the pandemic, it might be worth pointing out that the ruling Conservative party have long allied themselves with the interests of the banks and capitalists, who benefit from tax avoidance to the detriment of ordinary citizens.
Of course, this could very well change. Chancellor Sunak’s measures demonstrate a level of economic interventionism to aid Britons financially through the lockdown, and these measures were offered in conjunction with other policies such as finally providing accommodation for the homeless in empty hotel rooms. Of course, these are temporary measures designed to be used in a crisis, but with the discussion surrounding the pandemic often appropriating the imagery of war (when it comes to mobilising the public to follow social distancing advice) it bears remembering that the aftermath of WWII was an important factor in ensuring that the NHS was created in the first place.
Perhaps major shifts in policy will also be implemented once we recover from this catastrophe in the long term. It is clear that the wealth amassed in tax havens could play a part in alleviating the strain on public healthcare services that has only been worsened by COVID-19 (Shaxson, 2020). Implementing tax justice by way of cracking down on tax havens, complemented by other measures regarding excessive and unnecessary wealth, could form the basis of meaningful action being finally taken on this issue. Because if anything deserves to die as a result of this pandemic, it is tax avoidance.
References
Topham, G., 2020. Virgin Atlantic to seek millions in state aid amid Covid-19 slump. The Guardian, [online] p.1. Available at: <https://www.theguardian.com/business/2020/mar/27/virgin-atlantic-to-seek-millions-in-state-aid-amid-covid-19-slump> [Accessed 6 April 2020].
Peat, J., 2020. 8 Out Of The 10 Biggest Tax Havens Are British Territories. [online] The London Economic. Available at: <https://www.thelondoneconomic.com/news/8-out-of-the-10-biggest-tax-havens-are-british-territories/30/05/> [Accessed 6 April 2020].
IHME, 2020. COVID-19 Projections – United Kingdom. COVID-19 Projections. Seattle: Institute for Health Metrics and Evaluation.
Boseley, S., 2020. £2.9bn provided to free up hospital beds for coronavirus patients. The Guardian, [online] Available at: <https://www.theguardian.com/world/2020/mar/19/29bn-provided-to-free-up-hospital-beds-for-coronavirus-patients> [Accessed 6 April 2020].
Maggs, C., 2020. Never-Ending Austerity? More Cuts To Come After 2015. [online] politics.co.uk. Available at: <https://www.politics.co.uk/news/2012/09/20/never-ending-austerity-more-cuts-to-come-after-2015> [Accessed 6 April 2020].
Hopkins, N., 2017. Tax avoidance We gave May clear evidence of tax avoidance. Why won’t she act?. The Guardian, [online] Available at: <https://www.theguardian.com/commentisfree/2017/nov/23/theresa-may-government-tax-avoidance-paradise-papers-inquiry> [Accessed 7 April 2020].
Shaxson, N., 2020. Could the wealth in tax havens help us pay for the Coronavirus response?. [Blog] Tax Justice Network, Available at: <https://www.taxjustice.net/2020/03/27/could-the-wealth-in-tax-havens-help-us-pay-for-the-coronavirus-response/?utm_source=newsletter&utm_medium=email&utm_campaign=tax_justice_and_the_coronavirus&utm_term=2020-03-27> [Accessed 7 April 2020].
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