With the chancellor preparing his spring Budget on 8 March, Co-operatives UK has made a submission asking the government to create “a genuinely inclusive economy”.
The trade body for co-ops wants the government to stop awarding £220m a year in tax breaks to 40,000 high earners and instead allocate these resources to boosting the co-operative sector.
James Wright, policy officer at Co-operatives UK, said: “No government that’s serious about creating an inclusive economy would spend so much money on tax breaks for a handful of top earners.
“There are far better ways to spend these millions to create a genuinely inclusive economy, by helping more people get ownership and control of their livelihoods. If government wants to make a real difference it needs to fund practical help for people at a very local level. And it needs to help people to co-operate as well as to go it alone.”
In particular, Co-operatives UK is asking for the abolition of two schemes, Company Share Option Plans (COPs) and Enterprise Management Incentive (EMI). According to the organisation, firms using CSOP and EMI tend to limit these share options to a select group of senior employees.
In his 2016 Autumn Statement, chancellor Philip Hammond announced the abolition of the Employee Shareholder Status (ESS), claiming it was being used for tax planning by high earners. Co-operatives UK argues the same logic should be applied to CSOP and EMI.
Based on data published by the HMRC, Co-operatives UK highlights that in 2013-2014 the Exchequer gave away £220m in tax breaks through CSOP and EMI to 40,000 people.
During the same period the average tax break awarded through EMI was £15,400 per employee, more than the annual income of someone working 35 hours week for minimum wage.
According to Co-operatives UK, CSOP and EMI do not help contribute to a more inclusive economy. The organisation proposes three alternative measures, including investing the £115m that would be saved through the abolition of ESS in a co-operative entrepreneurs programme to help people set up co-operatives.
In addition, Co-operatives UK is proposing abolishing CSOP and EMI and reinvesting the money in an Employee Buyout Investment Fund. The body suggests the government monitored the “inclusivity impact” of other tax schemes to assess their contribution to a more inclusive economy, focusing on the benefits for low and middle-income workers.
Co-operatives UK is asking its members to sign up in support of the call. The full submission is available on its website.