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Ongelijkheid en de Duurzame Ontwikkelingsdoelen

  • 29 juni 2016

De ongelijkheid in de wereld neemt toe. Belastingontwijking levert daar een belangrijke bijdrage aan. Als we de Duurzame Ontwikkelingsdoelen willen halen, moeten we belastingontwijking aanpakken, bepleit Farah Karimi bij de UvA.

Farah Karimi, directeur van Oxfam Novib, gaf bij de CSDS-conferentie aan de UvA de volgende speech:

'Good morning ladies and gentlemen! It is a privilege to be here with you today and a great honor to give this lecture here at the University of Amsterdam.

Left behind

'Last month I visited Oxfam’s program in Mozambique. Our program there focuses on support to civil society, so their voices can be heard in demanding their rights on sustainable livelihoods, basic social services and other human rights. The country suffers from drought caused by El Niño. Oxfam helps with humanitarian aid. In cooperation with local organisations, we provide livelihoods support, access to clean water and support to farmers. At a site where we provide food vouchers I met a young woman called Sonja. [slide 1] She is 17 years old and expecting her first child. I asked her what her dream for her future was and she had no answer. She had no dreams, no expectations. Because of living in a situation of extreme poverty and powerlessness, this girl no longer dared to dream. This girls, dear audience, was clearly left behind.

Once a booming nation

'Only a few years ago, after the discovery of enormous natural gas supplies, Mozambique was one of the fastest growing economies in Africa. With growth estimated at 7 or 8%, lots of FDI, an improved political and security environment and so on. The promise of growth and development meant a lot for the country, being one of the poorest countries in the world, with more than half the population living below the poverty line.

'But what I witnessed is a country in a deep crisis. A new political crisis is currently tearing the country apart and as I mentioned earlier millions of Mozambicans have hardly any food left due to an extreme drought caused by El Niño. On top of that an unprecedented corruption case recently came to the light. Leaders of the governing Frelimo party borrowed $ 2 billion, unknown to IMF and even its own parliament, for personal gain. In doing so, they plunged the vulnerable country into a deep debt crisis– after which donors suspended their financial support to the country. To sum it up, the country may in fact be facing the worst crisis since the civil war over 20 years ago.
Crucial conditions for success were neglected in Mozambique: good governance and guarantees that good contracts are signed, so that the population benefits from the natural resources in the country. Instead the gap between a very few extreme rich and the masses of poor people has grown. This gap is very visible in the capital Maputo, where you can find Mozambique’s elite enjoy the luxury in the European-style bars and restaurants while the many poor – those that have been left behind - are roaming the streets.

Inequality is on the rise

'Mozambique is just one example. In fact, at the global level, inequality is soaring. Five years ago, the richest 388 people on earth owned as much as the bottom half of humanity. That already dramatic disparity in wealth has only become worse. Now just 62 people own as much as the bottom half.

'The promise of the Sustainable Development Goals, dear audience, was to leave no-one behind. What we have to make sure is that all parties, be it governments, donors, or private sector take their responsibility. For Sonja and millions of others in the same situation.

'The goals on ending poverty, hunger, for healthy lives, and to reduce inequality within and among countries are ambitious. But with the right political will and the necessary means, not impossible. 

How poor countries were let down

'Last year the important Financing for Development conference took place in Addis Ababa. At this conference world leaders discussed how to bring together the means, or finance to realize the sustainable development goals. The outcome document let poor countries down in many areas. Donors were unwilling to commit more aid, aid which now in fact is increasingly used to cover the costs of receiving refugees – at the expense of helping the poorest people in developing countries.

'Donors also insisted on a large role for the private sector, without adequate safeguards. And adequate safeguards are necessary as many of you will understand. Oxfam showed this in our Behind the Brands campaign. This campaign scored the 10 largest food and beverage firms on their policies in seven areas that are critical to sustainable agricultural production. We revealed stories of neglect and unfair treatment towards cocoa women farmers and workers. Mars , Nestle and Mondelez (known from Milka and Toblerone) subsequently made commitments to begin to tackle the inequality, hunger and poverty faced by women in their cocoa supply chains.
Together with allies such as Amnesty International, PAX, and Friends of the Earth Netherlands we also launched a fair Bank Guide. Our research revealed that seven banks had invested over 1,5 billion euro in twenty nuclear weapons producers. The private sector’s main drive is making profits. Without appropriate safeguards aid money cannot be used to subsidize private sector.

'Apart from highlighting a role for the private sector, the outcome document of the Financing for development conference emphasized the importance of increasing Domestic Resources for Development, in particular through increasing tax revenues. This is the main topic I want to pay attention to.

It's time to tackle tax avoidance

'Mozambique, like many other countries, has a lot to gain in that respect. A lot of tax income has gone lost due to tax avoidance and evasion. The government has granted contracts to multinationals with extremely favorable tax conditions. And companies as well as the very rich know the government has limited capacity to monitor compliance as well as to identify tax avoidance schemes or to discover tax evasion.

'Poor counties lose $100 billion a year due to corporate tax dodging, that is almost enough to get every child into school four times over.
A large part of the wealth of the global super-rich is hidden in tax havens like Panama, Delaware, or Singapore. Some 30 percent of all African wealth is held offshore.
In 2012 US multinationals reported $80 billion of profits in Bermuda, which does not tax corporate income at all. That is more than the profits that these companies reported in Japan, China, Germany and France combined.
Tax havens like Luxembourg, Switzerland, Belgium and – indeed – the Netherlands, allow multinational companies to shift profits out of developing countries into low-tax regimes. These rich countries have all agreed on the Sustainable Development Goals. However, they have not committed to undertake fundamental reforms to put an end to international tax dodging. This is what I call the tax hypocrisy. When it comes to development goals, they all agree, but when it comes to tax measures that are necessary to finance these goals, they look the other way.

Campaigning against harmful tax practices

'Therefore Oxfam launched a public campaign in many countries, including the Netherlands, calling on the government to end harmful tax practices. For example, we want public transparency about the deals our government makes with big companies (the so-called tax rulings) and we demand that deals which facilitate aggressive tax avoidance, are banned altogether.

'We cannot achieve the Sustainable Development Goals without creating a fairer tax system. We believe campaigns are necessary to put pressure, because tax policy always involves conflicts of interests, within and between countries. In that respect, tax is no different from any other development issue.

A story about fish

'Let me illustrate that with a brief story about fish. It is a common saying among development workers that instead of handing out fish to poor people, so they have something to eat, it is better to teach them how to catch fish themselves. Building capacity is more sustainable. However, it does not end there. Imagine that others are fishing in your waters, with larger and more modern boats and equipment, and hardly leave anything for you to catch. What’s the use of building capacity in such a situation? And that is precisely what happens to many African countries. Big European trawlers secured rights to fish in the waters of many African countries, making millions of local fishers worse off.
Tax is just like fish: the politics matter. The Dutch government is proud of its tax capacity building efforts. Of course, it is important to build the capacity of tax authorities in developing countries. However, capacity building is not enough. It is even more important to address the conflicts of interests, within and between countries, which create distorted budget allocations and dysfunctional tax systems.

Tax hypocrisy

'For rich countries, that means ending the tax hypocrisy. An hypocrisy that reflects the disproportionate influence of business and elites on our governments’ policies. There are no shortage of global examples of elite capture of the policy making process, resulting in policies that reflect private instead of public interests. And barely any issue is subject to so much corporate lobbying as national and global tax policies.
At the same time, developing countries need to put their own house in order. Many countries, like Mozambique, are foregoing huge revenues because of tax breaks for special economic zones, specific industries, professionals, or individual firms. Often people think that this is an inevitable outcome of countries competing for foreign investment. That is partly true. Although research shows that tax incentives are often not a decisive factor for investment decisions, foreign manufacturing firms know how to push for favorable tax breaks. Wasteful tax exemptions are a political problem and exist for a reason – they often serve special interests.

Reduce tax leakages: this is how

'I want to highlight two measures that would help to reduces tax leakages in rich and poor countries alike. One political, one more technical. First, countries need to stop the race to the bottom on corporate tax. The existence of tax havens in particular allows income and wealth to flow offshore, enabling the rich to get even richer and preventing essential redistribution that would reduce inequality and benefit society overall. Tax havens are parasites leeching off the tax systems of other countries. Until the rules are changed and there is fairer global governance of tax matters, tax dodging will continue to drain public budgets and undermine the ability to tackle inequality. To change this requires global coordination, including (in the short term) for measures against parking profits in tax havens, and in the medium/long-term harmonization of tax systems.

'Second, multinationals should be required to publish figures about taxes, profits, and the size of their activities on a country-by-country basis. This makes it much easier to identify profit shifting and discourages aggressive tax behavior. It also allows to identify which foreign investors benefit from corporate tax breaks. That information will help civil society in developing countries to hold their own governments to account. Two months ago, the European Commission proposed a public reporting standard that would require multinationals to report taxes and other key figures per EU country, but not per developing country. The hypocrisy is obvious here. We need separate data for all countries worldwide.

We agreed: leave no one behind

'All governments made an inspiring promise to realize the Sustainable Development Goals by 2030, for everyone. They promised to leave no one behind. To meet these goals, developing countries do not only need more resources, but also need to allocate a larger part of their budget towards essential sectors such as education, agricultural development, healthcare, and other essential public goods and services. Only one out of five developing countries currently meets the internationally agreed budget target for education.

'There are still millions of Sonja’s left behind, excluded from society. To me and for many people who support our work, this is the shame of our time. We must act. As individuals, as citizens, as civil society organizations, as companies and as universities! Together we must contribute to realizing the dream of a just and equitable world for all and we must influence our leaders to take the courageous decisions that are needed. Let us make Sonja dream!'

Bron: Oxfam Novib, 29 juni 2016

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