Preston City Council to push companies it works with to pay 'fair share' of tax
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The authority will also push for greater powers for local government to be able to “penalise poor…and reward good tax conduct” when awarding contracts.
It comes after the city council signed the Councils for Fair Tax Declaration and, in doing so, committed itself to “lead by example” on tax across all of its activities.
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Hide AdPreston has become the 22nd local authority to put its name to the pledge, which was drawn up by the Fair Tax Foundation social enterprise.
![Preston city councillors have signed up to a fair tax pledge](https://www.lep.co.uk/webimg/b25lY21zOjNhYTM3MWRlLWE1NmUtNDY3Ny1hMjhiLWNiZmY5YmNkMTNlMTo0OGZiMGMyNi1mNjdkLTRhMGMtOWZkOS02YWRiYTQ5ZGE2ZWM=.jpg?crop=3:2,smart&width=640&quality=65)
![Preston city councillors have signed up to a fair tax pledge](/img/placeholder.png)
The declaration received unanimous, cross-party support at a meeting of the full council when it was brought forward as a notice of motion.
Former council leader Valerie Wise – who was re-elected to the authority in May after a gap of 22 years – said that while tax was often seen as “a burden”, responsible tax conduct “benefits everyone by strengthening our public services with much-needed funds”.
Presenting the motion on behalf of her Labour colleague and Ribbleton ward representative Anna Hindle – who was unable to attend the meeting due to illness – Cllr Wise added: “This [declaration] would commit the council to exemplary tax conduct in [its] own affairs, require greater transparency from suppliers and [see the authority] join calls for more meaningful powers to tackle [tax] avoidance amongst supplier businesses.
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Hide Ad“Everyone needs to pay their fair share, especially now when public spending is under such intense pressure – and [given] the challenges this presents to the maintenance of crucial frontline services and tackling poverty in Preston.”
![Labour councillor Valerie Wise said that tax should not be seen as "a burden" - but a way to ensure vital services were properly funded](https://www.lep.co.uk/webimg/b25lY21zOjhlMjQ1ZGMyLTdjMjktNGZhYi04NmI5LWYzY2Y0NWE1ODM0ODpiZjdkZGQ5Yy02ZjY4LTQxM2MtYWZhNy1iZWEyNWE3YjExNTY=.jpg?crop=3:2,smart&width=640&quality=65)
![Labour councillor Valerie Wise said that tax should not be seen as "a burden" - but a way to ensure vital services were properly funded](/img/placeholder.png)
One of the specifics to which the city council has committed is ensuring that its contractors “robustly” implement tax rules known as IR35, which means that if an individual is providing their services through their own limited company, they should pay broadly the same income tax and national insurance contributions as if they were an employee.
The authority will also demand clarity from suppliers about their “ultimate beneficial ownership” and check that not-for-profit structures are not being used as “an artificial device” to reduce the payment of tax and business rates.
Liberal Democrat group leader John Potter said that it was important that the council monitored the implementation and effectiveness of its new commitments to ensure that it was not merely “virtue signalling”.
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Hide Ad“Are you going to report back…to say…we have not [used] these contractors for X, Y and Z reasons?” he asked.
![Liberal Democrat group leader John Potter says Preston City Council must match its words on fair tax with actions](https://www.lep.co.uk/webimg/b25lY21zOmQwNmE5OWEwLWU4YWMtNDJhZi05M2M4LThhZmVkYjE3MjQ4Njo1YWNmMjVkNS1kMWFmLTQyYmEtYjQzMi1mYzcyNmY0ZDEzYTc=.jpg?crop=3:2,smart&width=640&quality=65)
![Liberal Democrat group leader John Potter says Preston City Council must match its words on fair tax with actions](/img/placeholder.png)
Deputy council leader Martyn Rawlinson said that as the opposition groups were free to seek such information whenever they chose, becasue they run the scrutiny committee at the town hall.
Tory Ingol and Cottam ward councillor Trevor Hart said that his group “firmly believe[s] that [companies] need to pay taxes…in a fair way”.
“Our country is going through a time where every penny counts,” he added.
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Hide AdLabour councillor Lynne Brooks told the meeting that it was only wealthy firms that had the capacity to afford the kind of “creative accounting” that the fair tax declaration was designed to combat.
“It’s not fair competition for the people and the companies who are playing the game properly [and who] are paying their fair whack,” the city centre ward representative said.
Council leader Matthew Brown claimed that tax avoidance posed a direct threat to local businesses.
“A lot of these corporations use the tactic…to increase market share so small companies – family-owned companies within Preston – actually go out of business. They don’t have a chance to win public contracts.”
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Hide AdThe Labour leader added: “Just think about the staff who got us through the pandemic – the cleaners, the refuse workers, the litter pickers – they would love to be in a situation where they could go to the taxman and say, ‘I don’t want to give you 20 [percent] on my income tax, I want to give you five percent instead’. But they can’t.”
Meanwhile, cabinet member for community wealth building Freddie Bailey, said that many people were now in the perverse situation of paying more tax than ever, but not seeing that translate into better public services.
“Working people…as a percentage of their income, are now paying so much tax…but at the same time – compared to, say, ten years ago – the services are not funded as much.
“So while they’re being asked by the government to pay more and more tax on more and more things – and they have less and less disposable income [themselves] – the services they [receive] in terms of the NHS [and] the councils…don’t have as much money.”
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Hide AdAs part of the fair tax declaration, Preston has also committed to seeking clarity about the “consolidated profit and loss position” of potential contractors, as well as to not using offshore vehicles to purchase land or property – especially where it could result in reduced stamp duty payments.