According to Oxfam, the world’s poorest regions are losing out on as much as $170 billion every year as a result of tax avoidance and the UK government needs to do something about this and increase the level of transparency. Oxfam’s Katy Chakrabortty says that tax avoidance means that developing countries are denied billions in funding which could be used to deliver healthcare, education and poverty alleviation. She adds that tax evasions also hurts ordinary individuals in rich countries such as the UK and US.
The UK needs to be ahead of the curve
Ms Chakrabortty says it is important for the UK to get ahead of the next scandal and to begin treating tax evasion and avoidance as a serious public policy issue. According to UN figures, tax avoidance costs developing nations at least $100 billion every year with one economist estimating that tax evasion by wealthy individuals causes poor countries to lose $71 billion every year. There is a briefing paper on the issue which seeks to establish policy measures to ensure that countries can claim what is considered to be their fair share of revenue.
Policy measures need to be put in place
These include making sure that there are public registers which record the beneficial owners of companies in both the UK and its overseas and crown dependencies. Developing nations should be able to access tax and company data and that tax rules should be reformed so that incentives are not provided for UK companies to avoid paying tax in developing countries. The briefing urges the UK government to show global leadership when it comes to tax avoidance and this would mean advocating for global tax reform that would eliminate the flaws in initiatives such as the OECD’s base erosion and profit sharing initiative (BEPS).
UK multinationals should show how much tax is paid in each country they operate in
Ms Chakrabortty concludes by saying it is imperative that the UK government urgently push forward tough action to tackle tax evasion by ensuring that UK based multinationals reveal the tax payments they make in every jurisdiction they operate in. Tax havens such as Bermuda which have strong link with the UK should also be forced to reveal the true owners of companies registered there. Ms Chakrabortty says its not easy to reform tax rules but it is possible and with the government committing to lead on this issue, there is no reason for delay.
