Moving towards positive solutions to the challenges posed by the gig economy

Coming just days after the publication of Matthew Taylor’s government-commissioned independent review of modern working practices, the latest event from Common Vision’s Responsible Tax Lab gave an opportunity for the core points of the report to be delivered to a gathering of industry professionals from the financial, accounting and public sectors. We heard first-hand from Matthew Taylor about his insights into the tax system over the course of the review, and invited Paul Morton, Tax Director of the Office of Tax Simplification to respond initially before opening up the discussion to all present.

With figures in the capital alone showing a 75% rise since 2010 in people employed on a casual basis, it is not enough to campaign against the challenges posed by the gig economy. That would be like the backlash against music downloads in the 1990s when in fact – as we now know – embracing and improving a new marketplace works much more effectively than banning it. There is no doubt however that the status of these workers, the way in which their income is taxed and collected and the nature of their relationship with the  economy are issues which need open discussion between government,  trade  unions  and  the  wider workforce.

Until this year, corporation tax tended to dominate the headlines when it came to contentious tax policies. But in March, the announcement in Philip Hammond’s Budget (and its  subsequent withdrawal)  of  a  rise  in  national  insurance  payments  for  those  classed  as  self-employed  gave prominence to a new debate on tax. Of course, this is not actually that new, but the result of a gradual growing gap in the tax treatment of employed and self-employed that has taken places over decades. Matthew  Taylor  took  the opportunity  to  emphasise  that  the  recommendations of his report,  rather  than  intended  to  be  radical,  were proposed  to  prepare  the  ground  for  legislation  and  to  gradually  reduce  the  dichotomy  between employees and self-employed workers.

What might these solutions to the current inconsistencies between the tax and employment systems look like? It was not in the remit of the Taylor Review to drill too deep into this, but ideas raised by attendees ranged from the implementation of a payroll tax (instead of the current employer NI contribution) to  a restructuring of the method of incorporation whereby self-employed workers can maintain autonomous working patterns yet retain certain aspects of their tax deduction process rather than “become a company” for taxation purposes. Another interesting element of the discussion touched on tax hypothecation: whether it would help with public support for future reform if revenue collected from self-employed workers was ear-marked  for  the  funding  of  specific  benefits?

What seems clear is that this is the start, not the end, of a broader discussion.

Jon Ward

Jon Ward

Jon Ward is a researcher working on Common Vision’s Responsible Tax Lab. As an independent consultant he has worked with CDP, the Sustainable Development Organisation and others on issues of responsible investment, corporate strategy, sustainability and taxation. An activist and campaigner, he has worked in the UK and internationally on issues such as transnational EU citizenship and corporate influence on government. He is the associate editor of New Europeans website, campaigning for free movement for EU citizens and regularly works on voluntary campaigns for tax justice, transparency in lobbying and green investment.
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