Guest blog by Habtegiorgis Eyob, published to mark International Tax Justice Blogging Day 2016
Are you familiar with tax evasion, tax avoidance, tax havens, tax scam, tax dodging and mailbox companies?
These are the frequent words I have heard in the Even it Up team at Oxfam Novib in the last two months. I believe many of us contribute our share from our incomes in the form of taxes. In fact, it is relatively simple to track the income of private and government employees since their source of income is not difficult to manage. Hence employers can collect the income tax of their employees easily on behalf of the government agency. The problem comes with individuals and corporate firms having big fortunes and diversified source of income from around the world which makes it quite difficult to track.
I am a strong fan of soccer games and I like to watch big games especially in the major flight leagues of U.K and Spain. Now, I am not going to talk a about tactical strategy of players on the pitch to win against their opponents but rather I will discuss a little bit about the acts of some players in tax evasion or tax avoidance. In the last two months or so, the sports media was bumped by the unpleasant news related to the FIFA corruption scandal in relation to the world cup 2020 and the engagement of some players in tax evasion and tax avoidance.
Well it is hard to say some one is criminal until proven guilty but what the media echoed about the world famous players of Lionel Messi and Neymar from Brazil was not pleasant. Messi and his father were accused of tax avoidance of about $ five(5) million between 2007 and 2009 and another star from Barcelona was also alleged by the Brazilian court to try to evade taxes of about $16 million between 2011 and 2013 as a result the Brazilian court froze about $50 million of his assets.
I have raised this issue not because I have the intention to defame any of the players nor because they are the biggest abusers, but we expect more honesty from such big public figures in the sport arena.
The impact of tax avoidance and tax evasion is equally problematic in both the developed and developing countries. Every year millions of dollars in the form of tax revenues remain uncollected from big corporations and individuals and switched to tax haven countries. It is really surprising to hear a one building is an official business address of more than 18,857 companies in a Cayman Islands and a small city of Delaware with a population of 917,000 has about 945,000 registered companies (the economist Feb. 2013). Due to such huge engagement of big firms and wealthy individuals in tax evasion acts, “The world was losing about 156 billion tax revenue” (Oxfam report 2013, p:17)
Big corporations and wealthy individuals always try to exploit the loopholes created in the legal system or try to use the special privilege granted by some countries to hide their income and avoid paying their shares. Relatively speaking, corporations and wealthy individuals paid less in taxes than poor people. Based on Oxfam’s (2013) calculations, a rise in tax by 1.5% on the income of the rich billionaires could generate about $740 billion which is equivalent to the total fund required for basic health provision and school in the 49 poorest countries of our globe.
Lets us think with our conscience for a minute about millions of people who live below $ 1.25 a day. Think about malnourished infants crying because they could not get breast feed sufficiently from their mothers, let’s not forget the old aged who need special care and the children and women who suffer from often entirely preventable diseases due to lack of adequate health services. All of this human tragedy can be improved immensely if tax revenue is properly collected and all tax evaders are paying their equivalent share.
One of the main tasks of the Even it Up team is to advocate and campaign around the world to implement fair tax practices and expose individuals and corporate companies who engaged in such illegal practices. We have to raise awareness regarding people’s responsibility in contributing their own share. Above al, tax collected from individuals and business firms is going to use for public finance, to take care of our elderly and for provision of basic health services and schools. Avoiding tax means grabbing the small loaf of bread from the mouth of a starved child. So lets us work hand in hand to increase the awareness of people for a fair tax world and raise our voice in insisting governments take corrective measures for those who abuse the laws.
First published November 30th 2015 on http://oxfamnovibacademy.tumblr.com/