Most people understand how much tax they pay: income tax, value added tax, and charges. But unlike taxes on workers and citizens, the corporate tax web is deliberately complicated and shrouded in secrecy. When corporate tax policy is discussed, too often, it is kept behind closed doors.
Yet, the amount that corporations pay and where they pay it affects everybody. Tax funds quality public services such as our schools, hospitals, roads, ports, and other social services and economic infrastructure. Taxation also funds our social safety nets and is an important tool for wealth redistribution to fight inequality and increase opportunity for all.
When corporations pay less than they should, public services suffer and we all are forced to pay more. When corporations shift profits offshore to avoid taxes, they also shift funds which should be available to pay workers decent wages. All contribute to rising inequality, as well as undermine economic development.
“Profit shifting drives down wages”
Despite its incredible importance, corporate tax is not often publicly discussed, and one of the major reasons for the absence of public debate on the subject is that corporate tax is often portrayed as overly technical or something that doesn’t affect most people. The lack of information stymies the debate – and the lack of debate means that information is even less available.
But large corporations, accounting firms and corporate lawyers invest in shaping corporate tax policy, and ensure that global, regional and national laws, practices and enforcement regimes reflect their interests. These players dominate tax policy debates.
I believe that we need to make tax dodging a moral issue – an issue of human rights.
Winnie Byanyima, Oxfam International Executive Director
Africa loses $50 billion a year through tax avoidance and fraud
Thabo Mbeki, Former South African President
Global elites benefit from the myth that we cannot afford quality public services. They put great effort into keeping the truth about tax avoidance and evasion away from the public. It is up to us to challenge this.
Rosa Pavanelli, General Secretary of PSI
We need real tax reform which makes the rich and profitable corporations begin to pay their fair share of taxes. We need a tax system which is fair and progressive.
Bernie Sanders, US Senator
Evidence shows that multinational corporations are paying less and less tax while arguing for constant lowering of the corporate tax rate. Evidence also shows that many multinational corporations use aggressive tax arrangements to avoid the spirit, and sometimes the letter, of the law.
Ensuring that corporations pay the appropriate amount of tax requires transparent information that the public can understand.
Another reason for the lack of information is secrecy. Multinational corporations often refuse to provide information about their taxes citing corporate secrecy, and many corporations use tax havens, which add another layer of secrecy. Where corporations do publish material in the public domain, it is often aggregate information, incomplete, or produced in a highly technical way that does not allow the ordinary reader to easily understand the information given and what it means.
CICTAR untangles the corporate tax web and provides the information and analysis to help people participate in the corporate tax debate.
Ultimately tax policy is about how we redistribute the resources created by our community. Tax policy is about what we value. Rising inequality creates social and economic problems while the concentration of corporate wealth also increases the already substantial power of corporations.
Ensuring that everybody can understand the actual effects of corporate tax laws and be involved in the policy making process, means better and a more balanced tax policy and a fairer society for all.
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