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 was accused
for tax avoidance of about $ five(5) million between 2007 and 2009 and
another star from Barcelona also alleged
by the Brazilian court for trying to evade tax about $16 million between 2011
and 2013 as a result the Brazilian court froze about $50 million of his
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
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.
Eyob, Masters student of Development economics at the Institute of Social
Studies, is currently working as an intern in Income Inequality and Tax Justice
team at Oxfam Novib. You will find him hiding on the third floor poring over
massive Excel sheets of data on trade mispricing. His passion for the issue is
reflected in this provocative piece on tax justice.