G20 finance ministers meeting in Cairns from tomorrow (20 September) are being urged to support global tax reforms that serve the interests of all, not just a handful of rich countries and their multinationals, Oxfam Australia said today.
Oxfam Australia’s Policy Manager Jo Pride said the G20 could tackle widening inequality by showing bold leadership in cracking down on tax avoidance by multinational companies, currently draining billions of dollars of revenues from the budgets of rich and poor countries alike.
“A number of high-profile companies, such as Apple and Starbucks, have been exposed for dodging their taxes and cheating the system, but this is just the tip of the iceberg,” Ms Pride said. “Estimates suggest that US $100 billion of tax revenue is lost by developing countries each year through tax avoidance.”
Ms Pride said that whilst she welcomed this week’s OECD recommendations on combating tax avoidance by multinationals, and Australian Treasurer Joe Hockey’s recent comments that Australia would lead the G20 to make the international tax system fairer for all countries, it was still unclear what action the G20 would take to give poor countries a full say in the decisions and ensure they benefit from reforms.
“The inclusion of poor countries in decision-making around the OECD-led process on global tax reform needs strengthening, as developing countries could benefit substantially from the changing international tax environment given they have most to lose from the looting of tax revenues from their budgets,” Ms Pride said.
As part of global tax reform under way, new measures to be agreed by the G20 should require multinational corporations to disclose taxes paid in each country that they operate. This will help ensure that companies pay their fair share of tax where value is created and real economic activities occur.
“However, this information should not just be reported to tax offices,” Ms Pride said. “Australia should lead the charge to make this information publically available, so that citizens can see if companies are really paying their fair share of tax, and call them to account if they don’t.”
Finance ministers must also adopt a strong focus on sustainable and equitable growth models to tackle widening inequality.
Ms Pride said the widening gap between rich and poor around the world – including in all but four G20 countries – was a trend recognised by the International Monetary Fund (IMF), the Organisation for Economic Cooperation and Development (OECD) and the World Economic Forum.
“The G20 ignores this trend at its peril; the widening gap between rich and poor is a growing risk to stability that will greatly reduce the power of economic growth to pull people from poverty and threatens the sustainability of economic growth itself,” Ms Pride said.
“A narrow focus on GDP will not ensure that the poorest benefit from economic growth, and we call on the G20 finance ministers to support an inclusive growth model that tackles extreme income inequality.
“Many people around the world are recognising that the gap between rich and poor is growing and making the world a worse place to live.
“By concentrating wealth and power in the hands of the few, inequality robs the poorest people of the support they need to improve their lives, and means that their voices go unheard. If the global community fails to curb widening inequality, we can expect more economic and social problems, undermining efforts to eradicate poverty.”
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