We’re sharing here and article written by the Tax Justice Network’s Liz Nelson, head of our research and campaigning on Tax Justice and Human Rights for the news, discussion and debate website Irish Broad Left. The original article was published here.
Let’s talk about what nobody at Davos wanted to talk about: tax and women.
This year’s annual billionaires’ gathering at Davos was notable for surfacing one or two lone voices questioning the sustained value of philanthropy. Sitting on the fringes, they were challenging anyone who would listen – not many, I suspect – to consider a more revolutionary (radical) solution to global inequalities. There is an alternative, they argued, to relying on wealthy people to decide which causes get supported with an untroubling proportion of their private wealth: tax. Why, they asked, was no-one really talking about tax? The answer may lie somewhere in the scale of illicit financial flows, i.e., tax evasion, tax avoidance, regulatory abuse and profit shifting. Estimates put wealth held offshore in secrecy jurisdictions between “US$8 trillion to US$32 trillion, with US$200 billion annually in associated revenue losses”.
At the same time estimates of tax avoidance by multinational corporations are in the region of “US$500 billion to US$600 billion annually, of which around US$200 billion is suffered by lower-income countries”. This is a jaw-dropping amount of cash swilling about.
Addressing these illicit financial flows would make it possible to sustainably tackle global inequalities, particularly those experienced by women and girls.
Women shoulder the burden of being the carers in most societies. Their role is not counted systematically and is rarely given appropriate recognition. Women are estimated to spend around “2.5 times more time on unpaid care and domestic work than men” and estimated to “earn 77 per cent of what men earn”, although in developing countries in particular where self-employment in the informal economy is prevalent, the gender pay gap is often underestimated.
As a consequence, women and girls are locked out of the opportunities to obtain adequate paid employment, vocational training and education. Women are most in need of social protection including through health services, maternal health, education and childcare. Yet these protections are often eroded by political choices and fiscal policies.
A strong tax revenue base yielded through direct personal and corporate income tax is a prerequisite for governments to provide social protections. It mitigates against inequalities and, as set out in a new report by the Independent Commission for the Reform of International Corporate Taxation, it enables governments to deliver on human rights obligations to its citizens. Indirect taxes, such as VAT for goods and services, disproportionately take more from the poorest and those on low or no incomes.
Many governments since the financial crash of 2007/08 have been following a path of fiscal austerity by cutting corporate tax rates and personal income tax and looking to increase VAT – an approach that has hit the poorest, especially women, the hardest. Countries have pitted themselves against neighbouring countries offering tax incentives to attract foreign direct investment, establishing Special Economic Zones, one-sided tax treaties, passports and residencies for sale.
It is a massive “race to the bottom”. Governments and multilateral institutions alike give too little attention to the impact of lost tax revenues on women and girls.
New policy thinking is only beginning to acknowledge that the global tax system is under stress and ill-equipped to cope with the complexity and ruthlessness of illicit finance flowing rapidly between a web of secrecy jurisdictions. New approaches have yet to offer much in addressing the inequalities to which women and girls are subjected.
This policy mood change might be a nod to the dizzy-making figures of the funding gap for the Sustainable Development Goals. Funding needed to meet the goals that are designed to alleviate poverty, address gender equality and build inclusive societies was assessed by the Overseas Development Institute for “for three social sectors – health, education and social protection – as an estimated $2.4 trillion”.
The notion of financial transparency has much to offer in identifying stolen tax and illicit finance. The use of public registers identifying the real beneficiaries of companies and trusts, and annual reporting of the location of companies and where their real economic activity happens, represent two elements of a now established financial transparency and tax policy approach within tax and gender justice movements. Such transparency is invaluable in underpinning government accountability and extrapolating the true” tax take in any given jurisdiction.
So should we therefore wonder, was the lone voice at Davos who wanted to talk about tax a good omen for the equality of women? A positive shift in thinking? It seems not. The central interests of the most influential multilateral institutions are far from being “on the wane”. Policy choices continue to focus on increasing VAT and cuts in corporation tax. Laws remain intact which continue to support financial opacity. Women remain unequal in our societies.
Liz Nelson is the Director of the Tax Justice Network, and heads their programme of work on tax justice and human rights. Follow her on Twitter @zilhen.