Why multinationals should pay their fair share of Taxes
by Magdalena Sepulveda
Independent Commission for the Reform of International Corporate Taxation (ICRICT)
Will 2020 be as explosive as the year that is coming to an end? This is the anxiety that embraces governments around the world, still destabilized by massive and unexpected popular uprisings.
In Chile, where I come from, but also in Ecuador, Venezuela, Bolivia, France, Iraq, Lebanon, and Egypt, among others, we have seen millions of people invade the streets this year, paralyzing all activities in their countries. The contexts are different, but everywhere we can see the echoes of a global revolt against extreme inequalities and the degradation of living standards.
Ironically, on 10 December 1948 - 71 years ago - all these countries enthusiastically supported the Universal Declaration of Human Rights. According to this document, which remains visionary, they committed themselves to respecting not only civil and political rights (e.g. the rights to life, freedom of expression and religion), but also economic, social and cultural rights (e.g. to equitable and adequate remuneration, periodic paid holidays, and access to education, health care, and necessary social services).
All rights that are increasingly being violated in an increasingly unequal world. Last year, according to Oxfam, 82% of global wealth generated went to the richest 1% of the world''s population, while the poorest 50% - 3.7 billion people - did not benefit from this growth in the least.
Faced with popular demands, discredited governments excuse themselves by arguing that their coffers are empty. They tell us that they are forced to take austerity measures, they want to convince us that they do not have the money to finance quality public services, that they lack the means to provide their elderly with decent pensions, and that they cannot cope with the climate crisis.
However, the evidence shows that austerity measures are not the solution. They only aggravate gender and racial disparities, plunge people into and keep them in poverty, and deprive them of access to health care, education, or housing.
Citizens in the streets demand a progressive increase in tax revenues in order to provide the population with the goods and services necessary for a dignified life.
There are several public policy options that would allow even the poorest countries to increase their fiscal coffers. Within those solutions, it becomes more imperative for countries to change the international tax system, which is not only obsolete, but also unfair.
The current system allows for systematic tax evasion by multinationals. They can declare their profits in the countries of their choice by manipulating transactions between their subsidiaries.
In this way, they are able to be loss-making where taxes are high - even if it is in these countries where they generate more economic activity - and to declare high profits in jurisdictions where taxes are very low or even nil - even though they do not actually produce or have any clients there.
This is no small problem. For example, in the United States, 60 of the 500 largest companies, including Amazon, Netflix, and General Motors, did not pay any taxes in 2018, despite an accumulated profit of US $79 billion.
Developing countries are thus deprived of at least US $100 billion annually, which is diverted to tax havens. This sum is greater than all the money spent by rich countries on development assistance.
If multinationals - and the super-rich - do not pay their fair share of taxes, governments cannot invest in access to education, health care, and decent pensions, or take measures to mitigate and adapt to the climate crisis. The impact is even greater for developing countries, as they rely more on corporate taxes. They account for 15% of total tax revenues in Africa and Latin America, compared to 9% in rich countries.
Furthermore, the tax burden is shifted to the poorest, usually through taxes regressive to consumption, such as value-added tax (VAT).
This is what recently led the Organisation for Economic Co-operation and Development (OECD) to pronounce itself for the first time in favour of a change in international tax rules.
However, as we have pointed out at ICRICT - an international tax reform commission of which I am a part - its proposal is neither ambitious nor fair enough. OECD wants to distribute only a very limited part of international taxes, and according to criteria that will benefit the rich countries first and foremost, at the expense of the others.
It is therefore imperative that the governments of developing countries mobilize. For the first time, they have the opportunity to make themselves heard. While richer nations have more power in the negotiations, OECD has invited 135 countries to speak on the issue in the coming weeks.
If some governments have not yet understood the importance of the issues at stake, it is we, organized civil society and ordinary citizens, who must intervene to put pressure on our governments.
On this International Human Rights Day, it is incumbent on all of us to make a clear commitment to the issue of international taxation, no longer considering it as a technical issue to be discussed behind closed doors.
We must work collectively to put the interests of the majority of citizens above the often unreasonable profits of a small group of shareholders. From Santiago to Beirut, the streets remind us: the fight for human rights is also the fight for a dignified life, without the fear of hunger and poverty.
* Magdalena Sepulveda is a member of the Independent Commission for the Reform of International Corporate Taxation (ICRICT). Previously, she was the United Nations Special Rapporteur on Extreme Poverty and Human Rights.
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What is land corruption - The abuse of entrusted power for private gain
by Transparency International
The increasing demand for land around the world — brought about by climate change, population increases, large-scale farming, mining and many other factors — builds relentless pressure on the land that nurtures us and all other living beings.
What is land corruption?
The abuse of entrusted power for private gain within land administration and management is known simply as “land corruption”. Whether it’s citizens being forced to pay bribes to register their property, the sexual extortion of women in return for land access, secretive deals between investors and authorities, unaccountable urban planning, or customary laws that deny land rights to vulnerable groups, land corruption hits poor and marginalised people the hardest.
One in every five people around the world has paid a bribe to access land services, according to our research. This number leaps dramatically in Sub-Saharan Africa where the research reveals one in every two people accessing land services reports having been affected by corruption.
What are the impacts?
The negative impacts of land corruption are many and far-reaching. Without coordinated action by local, national and international institutions and civil society, it will continue to:
Fuel land grabbing, forced evictions and conflicts. Land corruption leads to a high number of conflicts around the world and an increase in land grabbing.
Compromise women’s land rights. Land corruption impedes women’s opportunities for land ownership, use and access, and increases entrenched gender inequality by limiting women’s decision-making power and preventing them from benefiting from economic opportunities and sustainable development.
Increase poverty and inequality. Land corruption reduces access to land and damages the livelihood of small-scale producers, agricultural workers and landless rural and urban poor who are most vulnerable to bribery and other corrupt practices.
Undermine the Sustainable Development Goals. Corruption undermines the critical role land plays in poverty eradication, food security, gender equality and other types of development.
Our approaches to tackling land corruption
Since 2015, Transparency International has worked across Sub-Saharan Africa to understand and confront the many forms of corruption at play within land administration and management. Working together with our national chapters, located throughout the continent, we have devised and implemented a wide range of innovative practices in response to the unique challenges presented by the problem.
Six examples of these practices feature in a new publication entitled Combatting Land Corruption in Africa: Good Practice Examples. The approaches shared include the use of public interest litigation to resist the mass eviction of poor residents in urban Kenya, awareness-raising campaigns on land rights in Madagascar, and video advocacy exposing land corruption scandals in Zimbabwe.
Participatory video provided women from the Upper East region of Ghana with a platform to speak out against the corrupt practices that leave them landless as a result of widowhood, threatening an estimated 50,000 widows in the region with destitution. Placing video cameras into the hands of women otherwise on the margins of society provided a unique opportunity for their voices to be heard by decision-makers at the local, national and international level.
In Uganda, Transparency International held a series of open days as a forum for citizens to learn about land rights and interact with a range of organisations providing advice and guidance on land corruption and related issues.
Each example includes a concise breakdown of how to carry out the practices and a detailed description of how each one was implemented by the national chapter responsible.
Putting land corruption on the agenda
For many years, Transparency International has helped drawn attention to the issues surrounding land corruption throughout Sub-Saharan Africa and beyond. We have used every opportunity to urge the global land rights movement to recognise and address land corruption in all its forms. We have advocated for targeted responses by government at local and national levels, and also provided support and guidance to civil society organisations working on the front line.
We are, therefore, very glad to attend the Conference on Land Policy in Africa which is themed “Winning the fight against Corruption in the Land Sector: Sustainable Pathway for Africa’s Transformation”. The conference is being held in Abidjan, Cote d’Ivoire, in November 2019, with the aim to deepen the capacity of those working on land policy by improving access to knowledge and information.
Representatives from Transparency International (including staff from national chapters in Ghana, Kenya, Madagascar, Uganda and Zimbabwe) are presenting a masterclass on land corruption for conference delegates to learn from our research, activities, challenges and successes in tackling various forms of corruption within land systems across the continent.
Our Kenyan chapter is presenting a paper entitled An Analysis of Dispute Resolution Systems as a means to fighting Land Corruption and Promotion of Access to Justice — the case of Kenya and Ghana. The paper analyses several dispute resolution mechanisms — such as mediation and negotiation — to address land corruption and promote universal access to justice. It asserts the urgent need to examine legal and institutional reforms that promote access to justice, and also to measure progress towards achieving this for all.
We are excited to share our experience, research findings and resources developed through the Land and Corruption in Sub-Saharan Africa programme over the last five years. http://bit.ly/2LdmBaZ http://voices.transparency.org/
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