Why corporate tax avoidance is a form of serious corruption

Obstacles
Taxes are a way to spread the wealth, reduce inequality, and make sure everyone has access to basic services. However, it's difficult to do so when large corporations do their best to pay next to none of their owed taxes.

In 2016, Amazon made €21.6 billion in revenues. Under UK corporate tax laws, the company would be obliged to pay 20 percent tax on this income. So Amazon should have paid €4.5 billion in taxes. However, the company only paid a flimsy €16.5 million — just 0.36 percent.

Tax avoidance has been described by the President of the World Bank as “a form of corruption that hurts the poor,” and this is no exaggeration. Currently, 73 percent of global Fortune 500 companies are using offshore tax havens, sending money to low-tax countries to avoid paying tax in the country in which they operate.

When wealth is taken out of countries rather than reinvested into essential services, it inevitably affects citizens negatively. 

Austerity measures are becoming increasingly common, with vast cuts often made in health and education, hitting the poorest members of society the hardest.

As well as these impacts, the extent to which corporate tax avoidance is taking place across the world is effectively rendering global aid useless and ineffective. For example, the world’s 20 richest countries provide around $140 billion in foreign aid to developing countries. Whilst this is a large amount, the UN Conference on Trade and Development has estimated that multinationals avoid $100 billion worth of corporation tax in developing countries.

This was emphasized by Leth Gregersen, chair of Concord's working group on policy coherence for development, who said: "Europe cannot continue to give aid with one hand and take away with the other, and tax policy is a classic example of where it's doing this. Billions go to poor countries in aid only to return again to rich countries via tax dodging. The balance sheet shows that the poor in developing countries are losing out here."

Government’s need to crack down on large multinational companies and demand a fair level of tax so this money can fairly be used to address society's most fundamental issues and provide support to those who need it most.  

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  • Bollywood's PadMan challenges the stigma around periods in India

    Solutions
    "America has Batman, Superman, and Spiderman; but India has PadMan.”

    Arunachalam Muruganantham is an innovator from India who first became known in 2012 thanks to his machine that produces cheap and durable menstrual pads for women in India. Six years and a lot of success later, his story is now a Bollywood movie by the name of PadMan.

    Muruganantham first started to work on his innovation thanks to his wife. Upon seeing her use old rags that he “wouldn’t even clean his two-wheeler with”, he started experimenting with different materials using his wife and sisters as test subjects.

    Menstrual pads in India, at the time of Muruganantham’s first foray into the research, were too expensive for most women to use regularly and the social stigma around menstruation added to the lack of access to hygienic menstrual products.

    Still, 40 percent of women in India don’t have access to sanitary products during their period.

    Back in his homemade lab, Arunachalam Muruganantham’s first tries weren’t going so well and, eventually, his wife and sisters got sick of their roles as guinea pigs and went back to their rags.

    He tried to find volunteers to test out his inventions but as menstruation was and still is a taboo in India he had trouble finding anyone who was willing to speak to him about her experiences.

    Thus, Muruganantham decided to test his ideas on himself, devising a concoction from rubber and animal blood. However, some people from his village caught him and he was ostracised for both his “crazy” ideas and his openness about the topic of menstruation.

    Even his wife broke up with him.

    Despite all of this, Muruganantham kept on with his research, believing that he was onto something. And he was indeed. It took him years but he ended up inventing a machine that can produce low cost sanitary pads.

    In 2014 Muruganantham was on the Times list of 100 most influential people for all his contributions to women’s health in India; In 2016 he was given the Padma Shri by the Indian Government, the fourth highest civilian award.

    Muruganantham’s research and invention not only brought affordable and hygienic menstrual products to women in India but his work also has contributed greatly to the fight against the social stigma against menstruation in the country.

    PadManis another step towards defeating the stigma. Only a few years ago even talking about menstruation was frowned upon in the country but now it is the subject of a Bollywood film starring one of India’s most prominent leading men Arijit Singh.

    Talking about menstruation, along with providing women and girls hygienic, and affordable, menstrual products both saves their lives and greatly improves them.

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  • 'Hi, I'm Rosa, I'm 14, and I'm worried for my generation'

    Your moment

    "My name is Rosa Anders. I’m 14 years old and I am afraid for my generation. I am afraid of the environmental chaos climate change will bring and how it will impact me and my peers' lives. I’m just a teenager so I don’t have the solutions to these major world problems, but I believe part of it lies in individual actions.

    I am a member of the youth council of War Child. War Child is an organization that helps children who are or have been in a war. They do this by giving the children a safe place where they can play, get an education and psychological support.

    I am not a child of war. On the contrary, I had a very safe and privileged childhood, so why am I on the council? I believe if policies are made for children, they should have a say about them too.

    The youth council of War Child advises the organisation on policies. War Child is in the process of creating a youth council in each of the fifteen countries they are active in. This way, eventually there will be youth advising War Child around the world. Until then, since children at war can’t speak up directly, we — the free children  — should do our part.

    I was always interested in War Child and find what they do very important, and I always wanted to help them, but I never really knew how. I think this is a common issue that young people have.  There are so many world problems that need to be solved: Child marriage, discrimination, war, climate change, the list does not end. But I don’t think we are helpless.

    For example at War Child Netherlands, with the help of an external expert, we have been making a list of all the things we can do to save energy and make the building War Child operates in more sustainable. We put stickers on all the meat in the fridge, indicating how much water was used for its production and how much CO2 was emitted. We also added a Youth Council sticker asking to choose for alternatives to meat.

    Any young person can join youth councils, collect money, participate in fundraising events, for example, The Dam Tot Damloop or Cityswim in the Netherlands. We can contribute to spreading the word about world issues and possible solutions by giving presentations in schools. It is very important to realize not everything is just for adults.

    I think that if we all work together and everyone does something we can solve these world problems. I’m not saying that everyone has to be an activist, what I mean is that if everyone does something, and it doesn’t even have to be something big, then it helps. From making a donation to spending one day a month working at a charity, we can all contribute to make this world a better place.

    Rosa "

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  • Forbes introduces a philanthropy score to their 400 richest list

    Your moment

    Every year, Forbes magazine publishes a list of the 400 richest people in the US. How the list is compiled is pretty straightforward: it is a list of US citizens (and permanent residents) who have made the substantial majority of their fortunes in the US. It’s a list of billionaires.

    Forbes doesn’t explain in detail how they calculate the net worth of the people on the list but we know that they take into account both the assets these people have  (companies, cars, boats, planes, islands,...) — and their debts.

    Each year, the list is pretty much the same. Same names switching ranks, making a few more or a few less million each year; mostly men, mostly white, mostly above 40.

    However, this year brought a new addition to the list: a philanthropy score. For the first time, billionaires are ranked not just on how much money they have but also on their generosity. Each billionaire is scored on a scale of 1 to 5 with 5 being the most generous.

    The two main factors behind Forbes’ methodology in calculating philanthropy scores are an estimate of each individual’s total lifetime giving and the percentage of their fortune they have donated. In some instances, Forbes explains, billionaires have been bumped up or brought down based on other factors like personal involvement in their charitable giving.

     Here are some highlights from the newly introduced philanthropy score:

    • Out of 400 people who have a net worth of at least $2.9 billion, only 29 received the highest score of five.

    • In terms of percentage, right-wing media’s favourite boogeyman George Soros was the most generous: giving 79 percent of his wealth, $32 billion, to his own philanthropic network Open Society Foundation.

    • In not-so-surprising news, Bill Gates has donated the most with $35.8 billion, 27 percent of his fortune.

    • Jeff Bezos, who moved from the second richest in 2017 to the richest person in the US in 2018, breaking Bill Gates’ 24-year streak, only received a score of two out of five.

    • 76 of the 400 richest received the lowest possible score meaning: to date, they gave away less than one percent of their fortune or less than 30 million.

    • Amongst these 76 is US President Donald Trump, the first billionaire president in US history.

    But here’s the thing. We should approach the philanthropy scores on this list, as well as the people, with a grain, neigh a family-sized salt shaker, of salt.

    Firstly because, the system these people manage to get rich on, capitalism, is one that eats the poor and the disenfranchised. As apparent by the overload of white men with at least a middle-class background on the list, if you’re not born with these qualities and an added bonus of inexplicable and unearned entitlement, ‘making it’ is nearly impossible.

    Second, Forbes only calculates the amount and the percentage of donations. Where these donations go and their impact isn’t a part of Forbes’ methodology.

    Take, for example, The Koch Brothers who share the number seven spot on the list with $53.5 billion net worth each. Both Kochs have a philanthropy score of 4 and Forbes estimates that each has donated two percent of his fortune. However, The Kochs are infamous for their right-wing politics and disregard for the environment. The brothers are founders of so-called non-profit organisations like The Cato Institute and Americans for Prosperity, a think thank and a citizen activist group, which essentially are tools for policy change that serve the Koch’s financial and political interest. Nevertheless, they are non-profit foundations on paper so donating to them still adds to the philanthropy score.

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