Oxfam reckons that the four biggest pharmaceutical companies in the world are dodging an estimated £3 billion pounds in taxes. The aid agency says that such behaviour deprives governments in both the developed and the developing world of an important source of revenue that could be used for poverty reduction programmes and the provision of public healthcare. The poorest countries suffer the most from tax avoidance because they tend to rely more on corporate tax to finance government spending than they do on income tax.
An Oxfam spokesperson said it was not acceptable for big pharma to deprive governments of billions in tax revenue that could be used to alleviate poverty and provide healthcare. The irony is that these companies develop life-saving treatments for profit whilst depriving governments of revenue that could be used to save people’s lives. Given the amount of money that governments pay big pharma companies for their medicines, the least that can be expected is that these companies pay their fair share in tax.
Companies should pay their fair share
The analysis by Oxfam suggests that the four biggest pharmaceutical companies who manufacture vaccines and household brands are moving their profits from countries where they operate and transferring them to tax havens. The report also highlights how the industry in general lobbies governments, shaping policy that sets the price of medicines extremely high. Prices are so high that more often than not products are simply not affordable for public providers of healthcare or for patients.
R&D model needs to be overhauled
Oxfam says there is a necessity for the research and development model for new medicines to be completely overhauled so that drug discovery is determined by the needs of the public instead of profits. This is not the first time the pharmaceutical industry has been criticised. Recently the Health Secretary accused the manufacturer of a drug used to treat cystic fibrosis of ripping off tax payers and profiting off the back of the NHS. Whilst these companies do make medicines that can transform lives their behaviour may well end up preventing people from receiving the treatment they desperately need.
Tax avoidance is one reason for growing inequality
Tax avoidance is not limited to the pharmaceutical industry. It is taking place all over the world and is one of the driving factors behind growing income inequality. The United Kingdom has shown much needed leadership in tackling the problem of global tax avoidance and has passed legislation that forces global corporations operating in the country to publish details of all their activities in every country they operate in. The policy has yet to be implemented and Oxfam is urging the government to do so sooner rather than later.