A truly feminist government would prioritize a crackdown on tax dodging, by @oxfamcanadaBy Diana Sarosi, Policy Manager at Oxfam Canada
The latest leak of tax haven financial records lays bare once again the gendered reality of global inequality, and feminists around the world are fuming. Those benefiting from tax havens are predominantly men holding positions of power in our societies. Those most impacted by tax dodging are women picking up the costs in the form of higher taxes, paying for services out of pocket or doing more unpaid care work.
The Paradise Papers — a who's who of elites dodging taxes around the world — reveal Canada as one of the biggest sources of clients for the two offshore law firms identified in the leak. Prominent Canadian political figures have surfaced in the treasure trove of data. Despite denials and statements insisting nothing illegal took place, the optics don't look good. For a government that identifies as feminist, the Liberals must make addressing tax evasion a top priority once and for all.
It is now clear that the global tax system is utterly broken.
Politicians' talk on tax reform is merely a smokescreen to disguise their own complicity in tax dodging, and the scale of the problem only seems to be growing. Meanwhile, governments are hard pressed to find the revenues to adequately fund public services, and women pay the price as they lose access to quality public services and jobs, and their burden of unpaid care work increases.
In Canada, tax dodging has also been one contributing factor to a shrinking budget. The federal government's budget is now the smallest in half a century, at just 14 per cent of GDP. That means less money for crucial services like child care, programs to tackle violence against women and services for First Nations. When it comes to child care, Canada spends far below the OECD average, even though universal child care is a key factor in reducing women's economic inequality and helping level the playing field.
It's even worse in developing countries, where it is estimated that tax havens siphon $170 billion in tax revenues every year. One oil company in Uganda hired offshore financial services provider Mossack Fonseca — the firm at the centre of the Panama Papers last year — to avoid paying US$400 million in taxes. Imagine what that could buy in terms of schools, hospitals and child care. Actually, it would pay for Uganda's entire national health budget.
The first is increasing transparency. Canada is one of the world's most opaque jurisdictions when it comes to ownership of private companies and trusts. The government should create a public registry of companies that includes beneficial ownership information to ensure wealthy people cannot use shell companies and trusts to hide their wealth.
The government should also mandate large multinational corporations to publicly disclose their earnings in each country in which they are operating, to allow tax authorities, investors, journalists and concerned citizens to be able to scrutinize their actions. Canadian multinationals with consolidated revenues of $1 billion or more are already obligated to report these earnings, but not to the public. This must change. The threshold for reporting should also be lowered to include companies with revenues upwards of $40 million.
For millions of women around the world living in poverty, every dollar of lost revenue sets them further back.
Finally, Canada could spearhead a process to create an international tax body under the auspices of the UN to put all countries on an equal footing when it comes to closing tax loopholes. Developing countries, supported by civil society organizations including Oxfam, have been calling for this for some time.
Though there have been some efforts to tackle global tax reform, they have been flawed. In 2013, the OECD released an action plan to address profit-shifting known as Base Erosion and Profit Shifting (BEPS), to force multinationals to pay taxes where they really do their business. However, BEPS fails to address some key issues such as tax havens, ineffective tax incentives and harmful tax competition. Developing countries were also not invited to the negotiating table when the BEPS framework was created.
Playing a global leadership role by cracking down on tax dodging is not only the right thing for Canada to do, it's the feminist thing to do. For millions of women around the world living in poverty, every dollar of lost revenue sets them further back, making it that much harder to access public services, find secure jobs and provide for their families.
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