Around £320 billion is lost annually to corporate tax abuse and private tax evasion, the equivalent of nearly 34 million nurses’ salaries, according to the Tax Justice Network.
Poorer countries are most affected, with tax losses amounting to 52% of their combined public health budgets. It’s still the equivalent of 8% of public health money lost to tax havens in richer countries.
Multinational corporations move $1.38 trillion profits out of the countries where they were generated into havens yearly. Global offshore financial wealth reached $11 trillion in 2018.
It is the rich countries, and their dependencies, who allow abuse to flourish. British overseas territory, the Cayman Islands, tops the list for tax losses – followed by the UK itself, Netherlands, Luxembourg, and the US. The Cayman Islands has more registered businesses than residents.
The UK, and what the Tax Justice Network report calls its “spider’s web”, is responsible for 37.4% of world tax losses.
It’s no surprise big business and the world’s richest individuals are fiddling to a huge extent. The question is what should be done about it.
What is the solution?
Sadly, the Tax Justice Network doesn’t have answers, relying on self-regulation as the solution. For self-regulation to work, those currently profiteering would need to be convinced they were in the wrong! This challenges the whole ethos of capitalism – a system based on the accumulation of private profit.
The executive coordinator at the Global Alliance for Tax Justice starts to ‘get’ this: “Failure to deliver meaningful reforms… makes it clear the task was impossible for a club of rich countries.”
His solution – get the United Nations (UN) to deal with it – completely misunderstands the role of the UN in defending that capitalist club.
Socialists support measures like wealth taxes. Tackling tax evasion means removing the system which allows the accumulation of such obscene private wealth in the first place – the overthrow of capitalism and its replacement with a socialist society.
In the shorter term, it means nationalising those responsible for exploitation. This will become a key demand for building new mass workers’ parties around the world.