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In January 2017, on the eve of the Annual Meeting of the World Economic Forum (WEF) in Davos, Oxfam launched a new report titled ‘An economy for the 99 percent’. The report shows that the gap between rich and poor is far greater than had been feared. It details how big business and the super-rich are fuelling the inequality crisis by dodging taxes, driving down wages and using their power to influence politics. It calls for a fundamental change in the way we manage our economies so that they work for all people, and not just a fortunate few.
Winnie Byanyima attended the Annual Meeting and represented Oxfam in Davos. A press release can be found here.
In Davos, Ms Byanyima was invited to speak at a session organized by the WEF and France 24 titled "Taxation without Borders: A Fair Share from Multinationals", for which her remarks can be found below. She was joined on the panel by Angel Gurría (Secretary-General, Organisation for Economic Co-operation and Development), Valdis Dombrovskis (Vice-President and Commissioner, Euro and Social Dialogue, Financial Stability, Financial Services and Capital Markets Union, European Commission), Mateusz Morawiecki (Deputy Prime Minister and Minister of Economic Development and Finance of Poland) and Isabel de Saint Malo de Alvarado (Vice-President of Panama and Minister of Foreign Affairs); the panel was moderated by Stephen Carroll (Business Editor, France 24).
A video recording of the session can be found here.
REMARKS AS PREPARED
Ladies and gentlemen. 8 billionaires, all of whom are men, have the same wealth as half the world, 3.6 billion people.
As wealth concentrates in the hands of the very richest, the rest of society – especially the poorest – suffers. We need to keep this in mind when we discuss something that may be perceived as a fairly technical matter; “profit shifting and tax base erosion”.
Tax dodging and the global inequality crisis go hand in hand. Put simply: When the richest people and the richest corporations pay too little tax, their wealth rises, whilst those with less wealth have to foot the bill or suffer the costs.
Tax dodging is a human rights issue: it is a violation of the rights of ordinary people to health, to education to a secure future for their children. We must not lose sight of this.
And whilst the OECD process has been a strong step in the right direction, there is still a very long way to go. This is particularly true for developing countries, who were not involved in designing these processes, and whose input will always be second tier, while notorious tax havens like Switzerland had a seat at the table.
The OECD process also only tackled one half of the problem, the use of loopholes by companies to avoid their tax. Just as important is the race to the bottom on headline corporate tax rates. What do you do if you can’t dodge taxes? You encourage the tax rates to be so low you don’t have to.
We have seen Donald Trump promising to slash corporate rates, and the UK threatening to set itself up as a low tax island on the shores of Europe. Unless we fix this problem we could well see the de facto end to corporate tax in our lifetimes.
Tax havens are the front runners, but every country is being swept up in this race to the bottom. Kenya is losing $1.1bn a year to tax exemptions and incentives – almost twice what the government spends on its entire health budget, in a country where mothers face a one in 40 chance of dying in childbirth.
The OECD and Governments should support a new generation of international tax reforms aimed at putting a halt to the race to the bottom in corporate tax. The aim should be to ensure that all countries are able to deliver their commitments under the Sustainable Development Goals (SDGs), reduce their dependency on regressive taxation, and effectively set public spending – thereby helping to close the inequality gap.
Corporations should seek to approach their tax responsibility as conduct that goes beyond legal compliance and reflects their broader duties to contribute to the public goods on which companies themselves depend.
I remain optimistic. This problem is man-made. It can be fixed.
Photo credit: World Economic Forum / Manuel Lopez; session on 'Taxation without Borders: A Fair Share from Multinationals'