It’s a big step towards ending poverty for good.
The world’s poorest people are being short-changed by more than $100 billion every year, by rules that allow tax dodging by hugely profitable multinational corporations. This is income that governments could use to pay for hospitals, clean water, schools that people living in poverty desperately need.
Through Oxfam's work fighting poverty around the world, we've seen the devastating impact that missing out on education, or medical treatment, or even the basics like clean water and sanitation, can have on a person’s life.
We can be the generation to ensure hundreds of millions of people have a fair chance of overcoming poverty. Essential to that is fair taxes being paid where profits are made.
Watch our Director of Campaigns, Matthew Spencer, explain why Oxfam cares about ending tax dodging and why we made this film to support our campaign.
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.
Is Oxfam talking about the NHS?
No. Tax dodging affects both rich and poor countries, but it is poor countries that are hardest hit as they are twice as dependent on corporate tax as a proportion of the income they have available for things like schools and hospitals.
With your help, we can push 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.