When companies don’t pay their fair share of tax, it hits the world’s poorest people the hardest – depriving their governments of money that could be spent on vital services like hospitals, schools and clean water. Without these, people in developing countries simply don’t have a fair chance of overcoming poverty, says Oxfam.
Oxfam is pushing for a change in the rules that would force companies to be transparent about the tax they pay in every country they operate in. When this happens, it’ll be much easier to hold companies to account, and start to make sure developing countries are getting every penny they’re due – these are funds that could be used for vital services that people depend on.
A new short film by Oxfam has been made to illustrate the very real impacts that tax dodging can have on the health systems of developing countries around the world, but isn’t specific to any one country.
Why should you care about the issue of tax?
Because unfair tax rules are one of the persistent barriers holding people back from escaping poverty and reinforcing inequality. The UN estimates that tax dodging by big companies costs poor countries at least $100 billion every year. In poorer countries, a much greater proportion of the overall tax revenue comes from corporate taxes. Twice as much as in rich countries in fact. So if corporations dodge taxes that then creates a big dent in the amount of money available to hire doctors, pay for medicines, and pipe clean water to people’s homes and villages.
Tax means more money for better public services for poor people
Ultimately governments make political decisions about where tax revenue should be spent, but there is evidence to show that when poor countries collect more tax revenue they spend more on healthcare, leading to healthier populations. In addition, just like in the UK, citizens and organisations can be active in ensuring that extra tax revenue goes to important causes like health. Oxfam supports many organisations in developing countries to do just this. But if the tax revenue isn’t there it is hard for the government to spend all that’s needed. A paper published in leading health journal, The Lancet, shows a strong association between increased tax revenues and government spending on health. The research found that more tax revenue per person equalled more health spending per person. A further paper by Carter and Cobham (2016) examined and reaffirmed these findings.
And tax dodging hits the poorest people the hardest
Every year, 100 million people are forced into poverty and 150 million more face catastrophic financial hardship when faced with medical bills, according the World Health Organization. 400 million people worldwide do not have access to essential health services– such as healthcare during pregnancy and birth, access to clean water and sanitation. Even small increases in spending on health can make a big difference. For example, one study indicates that spending $5 a person extra each year in 74 countries could prevent an average of 8m deaths a year'.
Recognition of the importance of tax in fighting poverty is underlined by the fact that the funding for the Sustainable Development Goals (SDGs) relies less on traditional international aid and more on countries’ own ability to raise and use funds through their tax systems. Whilst aid remains vital now, it is important to work towards a time when governments can raise and spend all their own resources to meet the needs of their people.
A campaign for Public Country-By-Country Reporting
Oxfam is pushing for the UK government to lead the way in Public Country-By-Country Reporting around the world, and implement it by the end of 2019. It may be legal for companies to pay less tax by shifting profits through tax havens, but that doesn't mean it’s acceptable, or that we should put up with it. We need to fix the system that lets them do this, and a huge step towards that goal would be for companies to publicly report what they do, country by country.
Public Country-By-Country Reporting can help to stop multinational companies from hiding the full picture when it comes to the taxes they pay and where. Instead, they would have to publish annual reports breaking down their activities for every country they operate in.
Over a year ago the UK government promised to make this happen – and nearly two years ago the last Conservative Government agreed that the case had been made for change. There is no reason to delay.
Let's make sure they deliver on their promise and lead the international community into a new era of crystal-clear tax where every company pays its fair share. When this happens, developing countries will have more funds that they could use for vital services like healthcare, schools and clean water.
THE HEIST NO ONE IS TALKING ABOUT [YouTube]