G20 must act on tax evasion and rising inequality: Oxfam

Campaigns and Advocacy, Media Releases, News, World Finance & Trade Agreements article written on the 05 Sep 2013

Multinational tax evasion is entrenching poverty and weakening developing country economies, international agency Oxfam has warned ahead of the G20 leaders meeting in Russia which is set to chart a plan for boosting global economic growth.

Oxfam Australia Chief Executive Dr Helen Szoke said that as developing countries lost an estimated $110bn to $175bn annually to corporate tax dodging, Oxfam was urging the G20 to agree a rewrite of international tax laws at their 5-6 September summit in St Petersburg, which Foreign Minister Bob Carr was attending.

In July, G20 finance ministers approved a plan to clamp down on tax evasion by multinational corporates. So far, poorer countries outside of the G20 – who are particularly affected by corporate tax avoidance – have not been invited to participate in negotiations on new tax rules.

“The world’s poorest countries can ill afford losing billions that could be spent on tackling poverty and boosting their economies. Now the G20 must finish the job without delay, and treat developing countries as equal partners in efforts to stop tax dodging,” Dr Szoke said.

She said Australia – due to take over the G20 Presidency in December – was well placed to show leadership on this issue, given so many of our multinational enterprises operated overseas.  For example, Australian mining companies currently were operating more than 700 projects in 42 African countries.

“Mining, oil and gas companies should disclose all payments they make to governments on a county-by -country and project-by-project basis, as this will help ensure resource rich but poor countries get a fair share of their natural resource wealth, with tax revenues used for much needed services like schools and hospitals,” she said.

Research just released by Oxfam showed that African nations were losing nearly 2 per cent of their gross domestic product (GDP) as a result of companies fiddling the books through ‘trade mispricing’.

“This huge tax loss is equivalent to more than half the amount that governments spend on health in Sub Saharan Africa,” Dr Szoke said.

For every $1.1 billion draining out of developing countries via commercial tax evasion:

  • 11 million people at risk across Africa’s drought-stricken Sahel region could have enough to eat.
  • The annual salaries of 400,000 midwives in sub-Saharan Africa – where maternal mortality rates are the highest in the world – could be paid.
  • 200 million mosquito nets to fight malaria could be purchased. In Africa, a child dies every minute of this preventable and curable disease.

She said that G20 leaders had acknowledged that for prosperity to be sustained it must be shared more equally. Income inequalities were growing in most G20 countries, dampening economic growth and undermining social cohesion and political stability.

Oxfam is calling on the G20 to ensure that growth is fair and boosts equality, so that its benefits reach people living in poverty. As a first step, G20 countries should make reducing inequality a measure of progress alongside GDP growth.

For interviews, please contact Laurelle Keough on 0425 701 801 or laurellek@oxfam.org.au