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Panama Papers: Tax avoidance hurts the world’s poorest people
The massive fallout from the Panama Papers leak has driven the issue of tax avoidance to the top of the global agenda.
The significance of the leak is not that tax avoidance of this type exists, but the extent to which so many people – including political and business leaders – will go to avoid their tax obligations. The revelations are symptomatic of a culture of tax avoidance that exists worldwide, one that has severe implications on the world’s poorest and most vulnerable people. Ultimately, it undermines our ability to finance efforts at combating the greatest global challenges we now face.
Tax evasion and tax avoidance have implications for us all – but they have the greatest impact on the world’s poorest people. An estimated $213 billion is lost annually due to tax avoidance. To put this in perspective: basic transfer programmes to lift the global poor out of the misery of absolute poverty would cost about $65 billion a year – a fraction of the money lost to tax avoidance annually.
This lost revenue is needed now more than ever. The very future of our planet is under threat. Levels of conflict and humanitarian need around the world – exacerbated by the effects of climate change – are breathtaking in scale and truly global in nature.
Financing our #GlobalGoals
Last year’s Sustainable Development Goals, agreed at the United Nations, seek to address the enormity of these challenges in an ambitious and extensive plan. Taking up where the Millennium Development Goals left off, the new agenda sets out a more ambitious set of 17 goals and 169 targets. At its core, it aims to eliminate absolute poverty, ensure that no one goes hungry, and create a sustainable world where everyone has access to health, education and livelihoods.
The implementation of the new Global Goals will require diligence, political will and a robust global commitment to financing the plan. We are in a whole new paradigm. We are no longer talking in terms of billions of dollars, but trillions. Achieving the goals will require an investment of $2–3 trillion a year of public and private money over 15 years. That is roughly 15% of annual global savings, or four per cent of global GDP. It’s ambitious but not unattainable, and now is the time for turning ambition into action.
Of course, the burning question is... where will this money come from? In short, it needs to come from everywhere. The significance of these new goals is that they emphasise the universality of responsibility. As the world’s environmental, societal, and humanitarian concerns are so interlinked, we all need to contribute to a solution. That’s what we all signed up to at the Sustainable Development Goals meeting at the UN last September.
To achieve these goals, we need to meet the universally agreed target of 0.7% spending on overseas aid but we also need to engage beyond the governmental level and include individual citizens and the private sector too.
The achievements realised during the term of the Millennium Development Goals – particularly in the areas of hunger, AIDS, and education – show that when a concerted effort is made, substantial change can be affected. The problems we currently face are surmountable, but they will require an unprecedented collective effort to overcome them.
Global tax reform
Heroism has very often been associated with individual actions and pursuits. In the 21st century, if we are to take on the collective challenges we now face, true heroism will be found in the consistent and equitable implementation of fair taxation policy and those who follow that policy. The 21st century heroes will not only be those political and business leaders who make brave decisions, but every individual who embraces the quiet dignity of everyday self-sacrifice.
That is what makes the Panama Papers so shameful. Tax avoidance undermines the collective vision of societies and the global agreements to which they have subscribed. Moreover, it is simply unfair. That is why all sections of society, particularly the private sector, must make a firm commitment to tackling tax avoidance and embrace global tax reform. In pursuing the vision of the Sustainable Development Goals and a more sustainable equitable world, closing the loop on tax avoidance will be an essential starting point.