THE BLOG

You Pay Your Tax, I'll Pay Mine

18/04/2016 13:50

For many, the Panama Papers merely confirmed what they'd long since suspected. A large industry has flourished to help the rich and powerful exploit tax havens to avoid paying legitimate taxes on the bulk of their profits. Over 11 million leaked files also reminded us how very intertwined the worlds of business and politics have become.

In an age where the 62 richest individuals have as much wealth as the bottom half of the world's population and the gap between rich and poor within countries at its highest level in 30 years, we'd hope our politicians would intervene to create more equal societies.

Yet the papers connected more than 140 politicians, from 50 countries, to tax havens across the world. UK Prime Minister Cameron's father, Argentine President Mauricio Macri, President Zuma of South Africa's nephew Khulubuse and the brother in law of China's President were all complicit.

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Africa is always a loser in this global gluttony. Last year, an esteemed report released by the African Union's High Level Panel on Illicit Financial Flows, revealed that an estimated $60.3 billion was illicitly channelled out of the continent between 2003 and 2012, roughly one a half times the total donated in overseas aid during the same period.

Transparency International recently revealed that Heritage Oil and Gas Ltd, a company exposed in the Panama Papers leak, dodged a payment of over $400 million in Uganda. With the help of Mossack Fonseca-the law firm at the heart of the scandal, they reportedly artificially re-domiciled from the Bahamas to Mauritius.

These illicit financial flows have a crippling impact on governance. The bribing of state officials undermines state structures and interferes with the functioning of regulatory institutions. Services decline as there's less money to spend on them. And through amplifying inequality, the poorest and most vulnerable become more marginalised. The resulting discontentment undermines social and political stability.

More transparency in both the public and corporate sector is needed if we really hope to curb corruption. Legislation must enforce this internationally. People across the globe should have the right to access information on procurement and tenders, beneficial ownership, company directors and shareholders, how much tax companies are paying and where they're paying it.

Momentum is building across the globe to tackle corruption and illicit financial flows. David Cameron is hosting an Anti-Corruption Summit on 12th May this year, which aims to galvanise a global response to tackle corruption. Over 25 Government leaders are expected to attend. The UK is also the first member of the G20 to establish a public central registry of company beneficial ownership information and is encouraging others to do the same.

The African Union is also fighting back. To curb the mass exodus of funds from the continent, they've recommended that companies make updated beneficial ownership information publicly available and are encouraging African countries to review their double taxation conventions.

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Digital technology has a powerful role to play. It can support global transparency by enabling information to be accessed and shared at a greater scale, faster speed and lower cost than ever before possible. Information can be rapidly analysed so that people can use it to hold the powerful to account. It can also be used to raise public awareness and spark global campaigns which send a message to our leaders and deceitful corporates loud and clear. We won't allow your corrupt and greedy practices to hold us back any longer.

Yet real change happens offline. Activists on-the-ground will need to undertake the tiresome and slow process of translating the public outcry into concrete changes. They must be supported to understand and interpret the data, monitor services, expose corruption and mobilise effectively to address it.

This process is already underway in South Africa. Code4SA, a group which promotes open data in South Africa is working hard to ensure that civil society, journalists and the general public are able to access the information they need to hold government and corporates to account. They then support groups to utilise this information to expose corruption, work to improve service delivery and fight against unethical practices.

Corruption Watch, a not-for-profit fighting corruption receives reports from citizens through the web, SMS and a call centre. They analyse these in order to identify sectors and regions where corruption is rife and develop campaigns to address systemic issues.

In 2012 alone, companies in South Africa his over $29 billion overseas to avoid paying tax. Amandla.mobi is helping activists turn basic mobile phones into democracy building tools. They used them to highlight the impact of corruption on service delivery to women and encouraged them to sign a petition, calling on the then Finance Minister Gordhan to take measures to curb tax avoidance.

Open Democracy Advice Centre
has launched a campaign to protect whistleblowers, the vital agents who risk their life in order to expose corruption. Their 2015 publication Heroes Under Fire details the painful and harrowing journey often undertaken by these brave individuals and documents the experiences of the families of Xola Banisi and Moses Phakwe, whose attempts to blow the whistle resulted in their murders.

The 99% want a world where the people hold the powerful to account, so that money can flow to where it is needed most, creating a better quality of life for all. Greater tax revenues, if used correctly, would provide for better equipped schools and hospitals, well trained and supported teachers and nurses, better roads and support for the elderly, disabled and vulnerable.

Transparency is a good place to start. But to truly stamp out corruption, it will take a concerted effort by all of us, to ensure the powerful know that we the citizens are watching and demand better.


Infographics contributed by the following sources:
Visual Capitalists
CDD West Africa

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