The public undervalue business’s tax contribution and overestimate the amount of Corporation Tax that goes unpaid – and this has real implications for business’s reputation, according to a new Ipsos MORI survey for the Great Business Debate.
We know from past surveys that people in Britain are wildly wrong on many basic facts about our population and key social issues. The average person has a pretty poor understanding of things like what proportion of the population are immigrants, what percentage of teenage girls get pregnant each year and how the government spends our money.
These misperceptions are often important indicators of what’s worrying the public. It should be a concern for businesses then that people think that their tax behaviour is worse than it actually is.
People think that business contributes 17% of the total tax take, when in fact they pay 29% of all tax collected in the UK. This is a big gap, equivalent to an extra £72bn a year for the Exchequer.
They also think that 36% of businesses don’t pay all the tax they should, significantly higher than the proportion of individuals we think avoid tax (28%).
When we ask about the “Tax Gap” – the difference between what the Treasury expects from business taxes and what is actually paid – on average people guess that 31% of expected corporation tax goes unpaid, when the figure is actually only 9%, according to HMRC. And the majority of people think this gap is increasing, with hardly any (correctly) saying it has actually decreased in the last few years.
And this is reflected in attitudes: six in ten say that business does not pay its fair share of tax, and, more worryingly, two thirds say that business doesn’t care whether people think they pay their taxes or not.
And this matters: four in ten say that not paying the full amount of tax is one of their top three reasons for thinking badly about a business. And more directly, 23% claim to have boycotted a product or service because they think the company behind it has not paid the full amount of tax they should.
So what would help correct these misperceptions and increase trust? When you ask the public, the top two answers by some distance are for businesses to publish the amount of tax they pay (not buried in annual accounts, prominently on their website) and to provide an explanation for why they pay that amount.
This obviously won’t completely solve the problem – we know that “myth-busting” only takes you so far. Our “Perils of Perception” work across a range of issues shows that these misperceptions are at least as much an emotional reaction as a rational response to facts.
But it is an important step, and shows a commitment to transparency that is a benefit on its own. When people think worse of you than is really the case, you should have little to fear from telling the truth.