28 November 2011
By Dennis Howlett
New research published by the Tax Justice Network shows that tax evasion costs governments around the world more than US$3.1 trillion annually.
In Canada an estimated $81 billion a year is lost to tax evasion in the ‘shadow economy’ - that is half of our total healthcare spending. Canada ranks 11th out of the 145 countries surveyed in total amount of tax evaded.
Tax havens are a major part of the tax evasion problem – and these new findings come as the Tax Justice Network launches Tackle Tax Havens, a new campaign that highlights the critical role that these secretive states play in corrupting the global economy.
The issue of tax collection is rising fast up the political and social agenda, as countries across the world make deep cuts in public spending in ways that hurt the poor and the middle classes the most.
This new research demonstrates how important it is to tackle tax evasion and the tax havens that help wealthy individuals and corporations escape from contributing to the services that directly benefit them - from the health and education systems that support their workforces, to the roads that ship their goods to markets, to the courts of law that enforce their contracts or to the police who protect their property.
But tax havens are not just about tax: they cause colossal damage on many fronts. Tackle Tax Havens aims to inform the public about the offshore system and the problems it causes -- and to show what we can do about it.
Other key findings of the new report include:
- Africa as a whole loses the equivalent of 98% of its total healthcare budget to tax evasion
- 119 of the 145 countries surveyed are losing over half of their healthcare budget to tax evasion
- In 67 countries, tax evasion losses are larger than their entire health budgets
In Bolivia, tax evasion is more than four times as large as that oil rich country's health spending. In Russia, it is more than three times the size
More than $1 in every $6 earned in the world is not subject to tax because those earning it have deliberately ensured that their income is hidden from the world’s tax authorities
- In Greece and Italy, where economic collapse currently looks possible, more than €1 in €4 is hidden in the shadow economy
Dennis Howlett: Coordinator of Canadians for Tax Fairness
“Canada needs to do more to curb tax havens and tax evasion, especially when deficit-cutting threatens to gut our social programs and undermine the ability of government to ensure food safety and environmental protection. A new study by the Tax Justice Network estimates that Canada is losing over $80 billion a year. That is more than half of all our health care spending. Going after resource extraction companies and Canadian banks, as well as many rich individuals who are taking advantage of tax havens to avoid paying taxes to Canada and to the developing countries where they are extracting resources, is a much better way to reduce the deficit than cutting spending on health, education and environmental protection.”
John Christensen, Director of the Tax Justice Network:
“Tackling tax havens is a crucial part of ending the culture of tax evasion. Tax evasion is crippling public finances across the world but governments aren’t doing nearly enough to end this cancer.”
“Tax havens are engaged in economic warfare against the tax regimes of sovereign countries, and these estimates reveal the human cost in terms of the impact on health services.”
Richard Murphy of Tax Research UK, who undertook the research for the Tax Justice Network:
“New data from the World Bank published last year on the size of countries’ shadow economies let us prepare this estimate of tax lost to criminal tax evasion annually. The findings add a new policy agenda to public debate on the world’s financial crisis. For example, Italy loses €183 billion to tax evasion a year. Its current debt of €1.9 trillion represents just over 10 years tax of tax evasion on this basis. If only more had been done to tackle rampant tax evasion, Europe would not be facing a crisis today.”
“Tax havens can be beaten using three simple measures. First we demand that all tax havens put details of the ownership of all companies and trusts located there, and the accounts of those organisations, on public record. Second we demand that all multinational companies publish accounts that reveal their use of tax havens. Last, we believe that all tax havens should be required to exchange information each year on the income recorded within them belonging to the citizens of other countries with the places where those people really live.”
“These measures would shatter the secrecy of tax havens for good, and that means those committing tax crimes will no longer have places to hide the proceeds of their crimes. Nothing could make a bigger contribution than this to solving the world’s financial crisis right now.”
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For more information:
- Tackle Tax Havens website: www.tackletaxhavens.com
- Campaign video: http://www.youtube.com/watch?v=4d5FZU64Bnw
- Canadians for Tax Fairness website: www.taxfairness.ca
- Download full research findings and methodology:http://www.tackletaxhavens.com/Cost_of_Tax_Abuse_TJN_Research_23rd_Nov_2011.pdf
- To discuss the research findings please contact Richard Murphy of Tax Research UK who undertook the research on behalf of the Tax Justice Networkrichard.firstname.lastname@example.org / +447775 521 797
- All other enquiries please contact: Dennis Howlett, Coordinator, Canadians for Tax Fairness at email@example.com Cell: 613-863-3670