23 June - Want to fund better public services? End corporate tax dodging

29 June 2017
Rosa Pavanelli, PSI General Secretary
For decades we’ve been told that there simply isn’t enough money available to properly fund our public services. It is up to us to challenge this.

* This article was originally published in The Guardian

Ending corporate tax dodging to fund public services is both necessary and popular. 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.

That is why for the UN’s public service day on 23 June, Public Services International, our union affiliates, the Global Alliance for Tax Justice and civil society allies are highlighting the urgent need to stop corporate tax dodging to fund public services.

Around the world , we are calling for public country-by-country reporting to increase tax transparency, protection for whistleblowers who expose abuses, the establishment of a UN global tax body to set global tax standards and monitor shady capital flows and a minimum corporate tax rate to stop the race to the bottom.

In the UK, for decades, we’ve been told that there simply isn’t enough money available to properly fund our public services. We’ve seen privatisation, cuts to education, health and public housing, the introduction of user pays and then rising service charges. And we’ve seen wage freezes for essential frontline staff.

But recently we’ve also seen a wave of other stories – the LuxLeaks, the HSBC files, the Panama Papers - which paint a very different picture about this supposed money drought.

Estimates (pdf) put the total amount in offshore tax havens at over $20tn (£15.8tn). Economist Jeffrey Sachs calculated the total cost of ending extreme poverty worldwide would be a fraction of this amount – around $3.5tn (£2.8tn).

The clumsy attempt by UK prime ministerTheresa May to argue that there is no magic money tree illustrated how confident the elites are that this paradox will go unchallenged.

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Until recently even progressive political leaders internalised the thinking that tax reform to fund public services is economically and politically untenable.

But people are waking up to the massive fraud perpetrated against them. Like the nurse who confronted May. But it could have been a firefighter asking about the 10,000 job cuts in the fire brigade. Or a pensioner. Or a public housing tenant.

They see that corporate profits have soared since governments bailed out the banks – yet we still aren’t properly funding our schools, health, housing or infrastructure. Sometimes with tragic and disastrous consequences.

It is difficult to believe that our leaders do not understand the problem. More likely is that they do not want to act.

Simply exposing those who benefit from these obscenities has already fomented this sort of public anger: we must do more of it.

The recent leaks expose the connections between the wealthy, politicians at the highest levels and global tax avoidance. Only one leak, from one company in Panama, implicated five serving heads of state, two former heads of state, four former prime ministers and 61 family members and associates of prime ministers, kings and presidents including those of China, UK, Australia, Malaysia and Mexico – among them David Cameron’s father. Amber Rudd was later named in the Bahamas leaks.

The surge in support for Labour after it placed tax reform at the centre of its manifesto, or Bernie Sanders in the US, shows these policies are not just essential; they are also politically popular.

We need to support politicians and parties who take a stand on tax dodging. Because if we cannot provide bold alternatives to address inequality, and ensure universal access to public services, we risk ceding ground to the false promises and fear mongering of the far right.

Ensuring the very rich and global corporations pay their fair share has always been the best way to fund quality public services. But our politicians need to understand that it might just get them elected too.

 

Rosa Pavanelli is general secretary of Public Services International and chair of the Council of Global Unions.

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