Businesses and Tax – The Perils of Perception October 2015 Business and Tax – Perils of Perception | October 2015 | FINAL | Public 1
Business contributes the largest proportion of tax of any group of tax payers (29%), yet people massively underestimate this contribution (average guess is 17%) Perception Gap 22% Q -5 Income Tax 27% In the last year (2014- 17% Taxes paid by 2015), total government -12 29% businesses tax revenues were £602bn. To the best of your 16% Alcohol, tobacco +8 knowledge, what 8% and fuel duties proportion of this total 13% revenue do you think was -5 VAT receipts 18% generated by each of the following types of taxes? 12% National Insurance Average guess +4 contributions by 8% individuals 10% +7 Actual contribution as Capital Taxes 3% a propotion of total 10% tax revenue +4 Other taxes 6% including council tax Base: 1097 GB adults 16-75 Source: HMRC and OBR 2015 Business and Tax – Perils of Perception | October 2015 | FINAL | Public 2
The majority think business doesn’t pay their fair share of tax and don’t care that people think they don’t Q 2% Businesses don't care To what extent whether the public do you agree or 6% think they pay their 29% 35% 18% 6% disagree with the fair share of tax or following not statement: 1% Business does not 28% 33% 24% 10% pay its fair share of 7% tax Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree Don't know Base: 1097 GB adults 16-75 Business and Tax – Perils of Perception | October 2015 | FINAL | Public 3
And we estimate that over a third of businesses have not paid the full amount of tax they should in the past year - compared to thinking just over a quarter of individuals have done the same Q Out of every 100 businesses, how many do you think have Average guess: Average guess: not paid the full amount of tax 36% 28% they should on their profits, their purchases or other tax responsibilities in the last year? of individuals did not of businesses did Q not pay the full pay the full amount Out of every 100 people, how amount of tax they of tax they owe in many do you think have not owe in the last year the last year paid the full amount of tax they should on either their income or their purchases in the last year? Base: 1097 GB adults 16-75 Business and Tax – Perils of Perception | October 2015 | FINAL | Public 4
And on average we think nearly a third of Corporation Tax goes unpaid – when the actual figure is 9% Q Actual figure: 9% 0-10% 20% 0-10% What do you think is the latest estimate of the 24% 11-20% Corporation Tax gap? That is, what percentage of Corporation Tax that the 21% 21-30% government expects to be paid is not actually paid? Average guess: 31% 11% 31-40% 31-40% 10% 41-50% 8% 51-70% 6% 71-100% Base: 1097 GB adults 16-75 Source: HMRC 2014 Business and Tax – Perils of Perception | October 2015 | FINAL | Public 5
And we (wrongly) think the Corporation Tax gap is getting bigger – over half think the gap has increased, when it has actually decreased from 13% in 2005 to 9% in most recent figures Q 2% And do you think the Corporation Tax gap has increased, decreased or 9% 14% stayed the same over the Decreased a lot last 10 years? Decreased a little 22% Stayed the same 24% Increased a little Increased a lot Don't know 31% Base: 1097 GB adults 16-75 Business and Tax – Perils of Perception | October 2015 | FINAL | Public 6
We think it’s Government’s responsibility to ensure businesses pay the right amount of tax and it is not doing enough to prevent Corporate Tax avoidance 2% Q It is the government's responsibility to ensure that To what extent 55% 24% 13% 6% businesses pay the right amount of tax by making do you agree or the rules clear, enforcing disagree with the 1% them and closing loopholes following 4% statement: Government is not doing 7% 44% 27% 17% enough to prevent corporate tax avoidance 1% Government should offer incentives, allowances and deductions as part of the tax system to enable 11% 27% 29% 7% 16% 10% businesses to reduce their tax bill Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree Don't know Base: 1097 GB adults 16-75 Business and Tax – Perils of Perception | October 2015 | FINAL | Public 7
And this negative perception matters. Although paying the full amount of tax owed is not the most important quality in forming a positive view of business…. Q 48% Has good customer service In your opinion, 45% Treats employees with respect which two or three 44% of these qualities Offers high quality products or services are most important 26% Pays full amount of tax owed in forming a 23% Is open and transparent in its business dealings positive view of a 23% Is fair in the way it does business business? 13% Is environmentally responsible 11% Shows good financial results 11% Contributes to the local economy 8% Is innovative as a company 7% Has a clear vision for the future 6% Don't know Base: Split sample 548 GB adults 16-75 Business and Tax – Perils of Perception | October 2015 | FINAL | Public 8
…it is one of the top three factors which could damage a business reputation – just after poor customer service and treating employees badly Q 53% Does not have good customer service In your opinion, 50% Does not treat employees with respect which two or three 39% Does not pay full amount of tax owed of these qualities are most important 34% Does not offer high quality products or services in forming a 20% Is not fair in the way it does business negative view of a 20% Is not open and transparent in its business dealings business? 14% Is not environmentally responsible 8% Does not show good financial results 5% Does not contribute significantly to the local economy 4% Is not innovative as a company 3% Does not have a clear vision for the future 7% Don't know Base: Split sample 549 GB adults 16-75 Business and Tax – Perils of Perception | October 2015 | FINAL | Public 9
And this distrust can translate into action – nearly a quarter of people say they have avoided a company because they have not paid the full amount of tax they owe Q In the last 12 months have you boycotted a product or service specifically because 10% the company making or 23% providing it has not paid Yes the full amount of tax they No owe? Don't know 67% Base: 1097 GB adults 16-75 Business and Tax – Perils of Perception | October 2015 | FINAL | Public 10
How can business tackle these misperceptions? Publishing the amount of tax paid on company websites and providing explanations could increase trust Q Businesses being required to publish the 44% amount of tax they pay on their website Which one or two of these, if any, Businesses being required to publish an 43% would most explanation of the amount of tax they pay increase your trust in businesses as Businesses being required to sign up to a 24% statement of tax principles or government responsible tax code of conduct on tax payers? Businesses being required to show that the 16% management board are aware of, and have approved, the firm's strategy on tax None of these 7% Don't know 15% Base: Split sample 549 GB adults 16-75 Business and Tax – Perils of Perception | October 2015 | FINAL | Public 11
Notes on the data Interviews were conducted using i:Omnibus – Ipsos MORI’s online panel. All questions include all respondents unless otherwise states (1,097 GB adults aged 16-75) Where an amount is asked, respondents were asked to write an exact value (unless specified). The banding has been added at the analysis stage for ease of interpretation Where responses do not sum to 100, this is due to rounding Where specified, averages refer to the mean value (that is, the sum of the numerical values of each response divided by the total number of responses) Document Name Here | Month 2015 | Version 1 | Public | Internal Use Only | Confidential | Strictly Confidential (DELETE CLASSIFICATION) 12
Sources Total government tax revenue in the year 2014-2015 contributions as a proportion of total revenue by type of tax are sourced from HMRC Tax and NIC Receipts (published September 2015) and Office for Budget Responsibility Summer Budget Economic and Fiscal Outlook (published July 2015): https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil e/461721/Aug15_Receipts_Bulletin_v1.pdf http://budgetresponsibility.org.uk/economic-fiscal-outlook-july-2015/ Different taxes are grouped into six categories: Income Tax; National Insurance contributions by individuals; VAT receipts; Capital Taxes (including Capital Gains Tax, Inheritance Tax and stamp duties), Alcohol, Tobacco and Fuel duties; Taxes paid by businesses (including Corporation Tax, business rates and Employer’s National Insurance). Corporation Tax gap estimates (and historical estimates) are drawn from HMRC’s Measuring Tax Gaps 2014 edition: https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil e/364009/4382_Measuring_Tax_Gaps_2014_IW_v4B_accessible_20141014.pdf Document Name Here | Month 2015 | Version 1 | Public | Internal Use Only | Confidential | Strictly Confidential (DELETE CLASSIFICATION) 13
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