2021 will perhaps be remembered as the year when the great powers demonstrated their inability to assume their responsibilities to prevent the world from sinking into the abyss. I am thinking of course of the 26th United Nations Climate Change Conference (COP26) in Glasgow. The industrialized nations have reaffirmed their refusal of honoring this climate debt after they exhausted all available atmospheric space for development. This despite the fact that global warming is now a serious issue.
But this isn’t all. I also refer to the calamitous management of the Covid-19 pandemic. Rich countries have monopolized vaccines and hoarded them, then locked themselves into surreal debates over third doses and the relative merits of each vaccine. This strategy causes death and hampers economic recovery in vaccine-deprived nations, as well as making them a playground for more contagious, deadly, and more resistant variants that don’t care about borders.
Add the tax evasion by the ultra-rich through tax havens and we get a total loss in US $483 trillion.
I also want to mention another agreement that the Northern capitals imposed, which is more technical but still reflects their blindness and selfishness. It concerns the taxation of multinationals. It was completed in October and is a huge undertaking. This reform, which was first introduced in the 1920s in order to make international tax systems more modern, has now become obsolete in a globalized world. Thanks to its loopholes, multinationals cause States to lose some US $312 billion in tax revenue each year, according to the “State of Tax Justice in 2021” just published by the Tax Justice Network, the Global Alliance for Tax Justice and Public Services International.
Add the tax evasion by the ultra-rich using tax avoidance tax havens and we get a loss of US $483 trillion. This is enough, the report reminds us, to cover more than three times the cost of a complete vaccination programme against Covid-19 for the entire world population. Absolute terms, the richest countries lose the most tax resources. But this loss of revenue weighs more heavily on the accounts of the less privileged: it represents 10% of the annual health budget in industrialized countries, compared to 48% in developing ones. This plundering is not done on tropical islands dotted with palm trees, but it is the real culprits. They are mostly in Europe, first and foremost in the United Kingdom, which, with its network of overseas territories and “Crown Dependencies”, is responsible for 39% of global losses.
In this context, October’s agreement is a missed chance. Rich countries, convinced that complying with the demands of their multinationals was the best way to serve the national interest, put themselves behind the adoption of a global minimum corporate tax of 15%. In theory, the goal is to end tax competition among countries. Multinational corporations would not be able to declare their profits in tax havens as they would have had to pay the global minimum tax.
In reality, at 15%, the rate is so low that a reform aimed at forcing multinationals to pay their fair share of taxes risks having the opposite effect, by forcing developing countries, where tax levels are higher, to lower them to match the rest of the world, causing a further drop in their revenues. This is not a coincidence that Ireland, Europe’s tax haven, has graciously accepted the new regulation.
Taxation embodies solidarity. The absence of solidarity is the result. A global tax of 15% on the profits of multinationals will only generate US $150 billion, which, according to the distribution criteria adopted, will go, as a priority, to rich countries. If ambition had prevailed, with a rate of 21% for example, we would have obtained an increase in tax revenues of US $250 billion. With a rate of 25%, tax revenues would have jumped by US $500 billion, as recommended by ICRICT, the Independent Commission on the Reform of International Corporate Taxation, of which I am a member, along with economists such as Joseph Stiglitz, Thomas Piketty, Gabriel Zucman and Jayati Ghosh.
Making multinationals pay their fair share of taxes, fighting climate change, dealing with Covid-19 and future pandemics: in reality, everything is linked. The virus is currently on the rise in the northern hemisphere due to winter. However, the boomerang effect caused by vaccine monopolies does not need to be explained or shown. The climate emergency is . A recent study done by the World Inequality Lab has shown that the carbon pollution map perfectly matches that of economic inequality. The richest 10% of the world’s population emit nearly 48% of the world’s emissions–the richest 1% produce 17% of the total!–while the poorest half of the world’s population is responsible for only 12%. This gap is not only evident between countries but also within them. The per capita 2030. emission targets have been met in the United States, United Kingdom, Germany, and France. We are not meeting our obligations because of a few wealthy people, those who don’t pay taxes. Our elites need to recognize that tax, health, and climate inequality are the only ways out. There is no way to save humanity if this is not the case.
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