Corporate tax havens around the world are starving countries of billions of dollars needed to tackle poverty and inequality, according to a new report from Oxfam that identifies the 15 nations and territories leading this "global race to the bottom."
In order of significance, those 15 worst tax havens are: Bermuda, the Cayman Islands, the Netherlands, Switzerland, Singapore, Ireland, Luxembourg, Curaçao, Hong Kong, Cyprus, Bahamas, Jersey, Barbados, Mauritius, and the British Virgin Islands. They landed on the "world's worst" list because they employ damaging tax policies "such as zero corporate tax rates, the provision of unfair and unproductive tax incentives, and a lack of cooperation with international processes against tax avoidance (including measures to increase financial transparency)," Oxfam says.
In these countries, big businesses are dodging taxes "on an industrial scale," forcing governments to reduce public spending or raise taxes on average citizens in order to make up for lost revenues. According to the non-profit, this level of tax dodging costs poor countries at least $100 billion every year.
In turn, Oxfam warns in its report, Tax Battles (pdf), "the most harm falls on the public, which is faced with the triple impacts of a higher tax burden, declining public goods and services, and having to subsidize corporate profits and private wealth."
Or, as Oxfam tax policy advisor Esme Berkhout put it: "Corporate tax havens are helping big business cheat countries out of billions of dollars every year. They are propping up a dangerously unequal economic system that is leaving millions of people with few opportunities for a better life."
Tax Battles calls on governments to work together to stop tax dodging by:
- Stopping unfair and unproductive tax incentives and work together to set corporate tax at a level that is fair, progressive, and contributes to the collective good
- Ensuring tax blacklists are based on objective, comprehensive criteria including whether or not a country offers zero rates of corporate tax;
- Improving tax transparency by requiring all multinational companies to publish financial reports for every country in which they operate, so it is clear what taxes companies are paying and where.
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But Politico Europe says Oxfam's research "will...raise questions about just how effective the [European] Commission's crackdown on anti-tax avoidance can be," for example.
The publication writes:
Last week, a report by the European Network on Debt and Development showed that the number of sweetheart deals between EU governments and corporations has increased by almost 50 percent over the past two years—especially in Luxembourg and Belgium.
The initiatives proposed by the Commission in the wake of those revelations fell short, according to Oxfam at the time.