Tax builds stable societies
8 men own the same wealth as the bottom half of the world’s population. Extreme inequality is out of control and without tackling it we will not end poverty. We need to move to a human economy that is built on cooperation and more redistributive policies, especially fairer tax systems. Because taxation is without a doubt the most sustainable form of financing for much needed public services and healthy societies. Even more, it is one of the corner stones of the social contract to build stable societies.
Sustainable Development Goals
In 2015 the world leaders adopted the global sustainable development goals (SDGs) to replace the millennium development goals. All of these depend on resources to finance the achievement of these. But most tax systems in the world are far from being designed in a fair, equitable and sustainable way. Not to say the international tax system. Under a false call to preserve national competitiveness, we seem to be in an endless race to the bottom, especially on corporate taxation, competing one country against each other. This way no body wins. Undeniably the world is still in need for further tax reforms and many ideas are in play – related to corporate tax, tax on capital, tax on financial transactions – the list is long. To stop the growing extreme inequality and to transform our societies into being supported by a human economy much needs to happen. Fair tax reforms as well as stopping this harmful tax competition will be key.
A joint role for all of society
In this transformation we must all contribute with our own part - citizens, media, politicians, NGOs and businesses alike. We all have a role to play, we all have responsibilities. Working for Oxfam my role is to facilitate the voice of those not often listened too and advocate for sustainable lasting change to improve people’s lives. In relation to tax this has many dimensions including building awareness of the existing flaws in the current system, ensuring capacity building among citizens, making visible the important contribution to an economy corporate income tax is, but also advocating to business how tax is also a matter of good corporate governance and the potential positive impacts of responsible corporate tax practice. I am encouraged by the private sector actors that are open to understand this perspective and willing to discuss how they can contribute or how their actions can go from being an unintended part of the problem to a part of the solution. The best companies and investors realise that their success is inseparable from the success of the societies they operate in. Conversation and dialogue contributes to this. An example is the initiative The Tax Dialogue on corporate responsibility (www.thetaxdialogue.org) started by Oxfam IBIS in Denmark to bring together various stakeholders about to understand the challenges, opportunities, and responsibilities around tax and corporate responsibility for the private sector.
Turning conversation into practice
However, we also need to move from conversation to practice. Achieving the sustainable development goals is a joint commitment and to get there we have to move the conversation from focussing on what is needed from others onto what is needed from ourselves. For business this means they must see the SDGs as an opportunity for new thinking about truly integrated ways to contribute to sustainable development. 2017 should be the year where more business will take part in the conversation and articulate their hopes for how society shall interrelate to their business activities including their tax strategies and demonstrate this commitment with concrete actions. In the UK for example, it is now mandatory for big business to publish their tax strategies. This is a great change for business to take an opportunity to not only tick the box on complying with this, but actually reflect on and deliver useful information to the public on the values and principles that also underpin these strategies and how they align with the company’s sustainability profile. In Spain, it is mandatory for large companies to have a tax strategy, though not public. However, many companies have made the choice to unveil it. 2017 might also be the year were we see the EU reach an agreement on public country-by-country reporting for all the sectors and the best businesses should already be starting to think about how they can be ahead of the curve on this and deliver a high standard for implementation and usefulness of this novelty. This is a chance for progressive business to seize opportunities that it will materialise in concrete actions of responsible corporate tax practice in support of sustainable development and the fight against inequality.
Uncertainty is something that is not welcomed by business, and times are definitely uncertain. But the private sector is also heralded as a driver of innovation. New initiatives are needed to solve the challenges of extreme inequality. For developing countries, domestic resource mobilisation through taxation is one core aspect. For this we need to brave some new territory to move to solutions that will really work and where all share the commitment to contribute, and the ones that seek for the business to avoid paying their fair share are easily singled out. I hope that in 2017 everyone will seize the opportunity to think about how they can individually contribute to this and play a constructive and action oriented part in the conversations onwards.