Nairobi/Bangkok — Why can’t there be education for every child? Why can’t there be healthcare for everyone who needs it? Why can’t everyone be freed from hunger and deprivation? Though these are promised to all as rights, people are repeatedly told that there is no money.
The wonderful news is that this is false: there is money, we know where it is going missing, we know how to get hold of it, and this year brings vital new opportunities for progress.
Across the world, US$492 billion is lost to tax abuse by the rich and powerful a year: two-thirds, US$347.6 billion, is lost to multinational corporations shifting profit offshore to underpay tax; one-third, US$144.8 billion, is lost to wealthy individuals hiding their wealth offshore.
This revelation, set out in the latest State of Tax Justice report, is shocking and appalling. But it can and should also be recognised as cause for hope: we have a world to win.
Taxation is technical and complex, and this technical complexity is often weaponised to claim that any policies to raise revenues from the wealthy won’t work. But expert economic analysis that the G20 has commissioned shows that wealth taxes would be effective in unlocking vital resources to tackle poverty and fulfil the Sustainable Development Goals.
Indeed, some countries are already taking action to do this. Spain has successfully introduced a wealth tax on the richest 0.5%. Calculations by the Tax Justice Network have demonstrated that the world could raise US $2.1 trillion by copying Spain’s example.
Likewise, the policy framework required to prevent profit shifting by multinational enterprises is known – a combination that needs to include them having to register who owns them, having to report on the tax they paid in each country they operate in, and having to pay tax in the places where they generate profit.
The major challenge then is ultimately less technical and more political. But even for this political challenge, a path through can be seen.
This year, countries finally begin negotiations on a United Nations Framework Convention on International Tax Cooperation, which will include “commitments on equitable taxation of multinational enterprises [and] addressing tax evasion and avoidance by high-net worth individuals and ensuring their effective taxation.”
This year, too, momentum will be further boosted by the International Conference on Financing for Development, hosted 30th June to 3rd July by Spain, the draft outcome document of which includes commitments to ensuring that “profit shifting” by multinational enterprises is tackled so that they “pay taxes to the countries where economic activity occurs and value is created”, and to “strengthening the taxation of high-net-worth Individuals.”
Taxing the wealthy has been shown to be hugely popular across countries. And civil society campaigning is picking up pace. Building on the wave of mobiisation for tax justice worldwide, over forty organisations from across the world have united a joint campaign to “tax the super-rich”.
Their common platform calls for:
· Implementing ambitious tax rates on the richest people that are high enough to reduce inequality· Using revenues raised to invest ending poverty, reducing inequality, and tackling the world’s most pressing social and environmental issues· Ensuring global cooperation to curb illicit financial flows that allow the super-rich to evade tax responsibility· Shifting decision-making on taxation to a fair and globally inclusive forum, ensuring that all countries – particularly poorer ones – have an equal voice
For too long it has been normalised that whilst international law and national constitutions promise people inalienable rights, the resourcing needed to realise those rights is denied. But what does it mean for a child to be promised a notional right to an education if there is no school nearby, if fees prevent her attending, if there are not enough teachers, or if the conditions of the school make learning impossible?
What does it mean for a person to be promised a notional right to health if health centres are not staffed with enough nurses and doctors – and medicines? Fiscal policy is the instrument that makes the promise of rights a lived reality.
The extent of resources that can be deployed, and the measures that can secure those resources, are not mysteries, they are political choices.
Securing the resources needed to deliver on rights will not be easy. The concentration of wealth has also brought a concentration of power. But that is another reason why taxing the super-rich in each country across the world is vital: it won’t only raise essential revenue to provide essential services and prevent the most vulnerable from slipping deeper into poverty; it will also help restore democracy.
Attiya Waris is Professor of Fiscal Law at the University of Nairobi and UN Independent Expert on foreign debt, other international financial obligations, and human rights.
Ben Phillips is the author of “How to Fight Inequality”.
IPS UN Bureau
Follow @IPSNewsUNBureau
