Policy and Advocacy

Reform of global corporate tax system long overdue

It is impossible to develop long-term solutions to global poverty and inequality as long as the current scale of corporate tax avoidance continues to drain financial resources from low-income countries – resources which should be used to provide essential services such as health and education.

We recognise that Ireland has made some reforms to address corporate tax avoidance – however, these measures have not gone far enough to address the scale of tax avoidance facilitated by the State’s current corporate tax regime. There is clear and growing evidence that Ireland is still acting as a ‘conduit’ and facilitating large-scale tax avoidance. A recent Oxfam report entitled Off the Hook established that royalty payments sent out of Ireland were equivalent to 23 percent of the country’s gross domestic product in 2017. This equates to more royalties than sent out by the rest of the EU combined and makes Ireland the world’s No.1 royalties’ provider. With these payment levels far exceeding normal economic activity, this indicates that a jurisdiction is facilitating tax avoidance.

Corporate tax avoidance negatively impacts efforts to reduce global poverty reduction. The UN estimates that developing countries lose around $100 billion annually due to corporate tax avoidance. This deprives developing countries of vital revenue needed to provide the health, education and infrastructure that lift people – especially women – out of poverty. Increasing attention has also been drawn to how tax avoidance and tax evasion negatively affect women’s rights and are detrimental to closing the gender inequality gap. In 2018, a UN Women report concluded that transnational tax avoidance and tax havens have negative effects on gender equality. The European Parliament has also recognised the harmful effect of tax avoidance and evasion on women in a 2018 report on gender equality and taxation policies in the EU.

Efforts to reform the global tax system are now taking place at the OECD, an approach which Ireland supports. These reforms are essential to finance the Sustainable Development Goals. Corporate income tax is essential for revenue raising in developing countries which are particularly exposed to profit shifting and tax competition. The Irish Government needs to engage constructively with this reform process at the OECD and ensure that the world’s poorest countries stop paying the price for an outdated global tax system.

 

Oxfam Ireland is calling on the next government to:

  • Contribute to a second generation of international tax reforms by supporting a transformative international reform of corporate income tax. This would lead to an equitable rebalancing of taxing rights between developed and developing countries. The aim should be to find a solution for all economic sectors and not ringfence highly digitalised companies. This would ensure sufficient taxing rights for operations in consumer markets as well as manufacturing and natural resource operations. Redistribution of taxing rights should allocate profits based on corporations’ global activity and a combination of factors such as consumption, employment and production.

 

  • Agree a global minimum effective tax rate at a fair level. The minimum effective tax rate should be set globally, applied on a country-by-country basis without carve-outs, and set at a high enough rate to effectively curb profit shifting. It should generate additional revenues where economic activity takes place.

 

  • Require that all large multinational companies (MNCs) adhere to full and effective transparency by supporting efforts at an EU level to agree meaningful legislation on Public Country-by-Country Reporting. This would ensure that MNCs publicly report on a country-by-country basis where they make their profits and pay their taxes.

 

  • Review and reform Ireland’s Double Taxation Treaties: Ireland should adopt the UN Model Double Taxation Convention between developed and developing countries (the UN model) as the minimum standard.
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Ireland must take speedier action on climate change, support poorer countries through funding

The climate crisis is the most urgent issue facing the planet. It is already affecting many of the communities with which Oxfam works – undermining their livelihoods through gradual, insidious changes in temperature and rainfall patterns, and increasing the frequency and intensity of weather extremes such as cyclones, floods and droughts. Vulnerability to disaster and climate change matters because it perpetuates and deepens poverty and suffering. It stands in the way of people – particularly women – being able to enjoy their basic rights and reduces their chances of ever being able to attain them.

Ireland has been a laggard on climate action, with the Government dragging its heels and missing key targets. The Government’s 2019 Climate Action Plan is a step forward but it is nowhere near ambitious enough. According to the UN, Ireland needs to reduce global emissions by 7.6 percent year-on-year from now to 2030, to ensure it is in compliance with commitments made in the Paris Agreement to keep global warming to 1.5°C above current levels. However, measures outlined in the Climate Action Plan amount to an average of only 2 percent reductions in our greenhouse gas emissions from now to 2030.

This is why Oxfam Ireland is calling on the new government to:

  • Deliver annual reductions in climate-polluting emissions of at least 8 percent a year over the lifetime of the next government, i.e. the legally binding carbon budget for the period 2021 to 2025 would be equivalent to 8 percent year-on-year reductions compared to 2020.

The devastating impacts of climate change are being felt everywhere and are having very real consequences on people’s lives, especially in the world’s poorest countries. As well as reducing carbon emissions at home, richer countries like Ireland must provide sufficient climate finance to ensure the countries most impacted by climate breakdown have adequate resources to implement necessary adaption measures.

The Irish government has committed to at least double the percentage of ODA spending on climate finance by 2030. The overall climate finance provided by Ireland in 2018 was €80 million, which was approximately 10 percent of the overall ODA budget for that year. Therefore, to reach this target, Ireland needs to spend about 20 percent of its ODA budget on climate finance. However, with climate breakdown already under way, it is vital that this commitment is reached as soon as possible – by 2025 at the latest.

The next government needs to:

  • Help poorer countries cope with the climate emergency by reaching the target of spending 20 percent of ODA on climate finance by 2025. Increased ODA spending on climate finance should receive an additional budgetary allocation rather than being diverted from the existing ODA budget.
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General Election 2020: An opportunity for Ireland to lead by example

The general election on 8th February 2020 provides the opportunity to reimagine Ireland as a political leader on key global issues. Critical issues such as climate change, tax justice, gender equality and migration require visionary leadership, solidarity and a unity that is found by focusing on our shared humanity rather than our differences.

The climate crisis is the most critical issue facing us today and affects many of the communities with which Oxfam works. The rising temperatures and changing rainfall patterns associated with a warming planet disrupt livelihoods, while the increased frequency and intensity of extreme weather events such as floods and droughts can have a devastating impact on vulnerable communities. Climate change drives immeasurable poverty and suffering. It also stands in the way of people – particularly women – getting the opportunity to enjoy their basic rights and reduces their chances of ever being able to attain them.

Meanwhile, global inequality is out of control and the situation in Ireland is no different. A recent report by Oxfam noted that Ireland has the fifth-largest number of billionaires per capita in the world. Overall, the world’s 2,153 billionaires own more wealth than the 4.6 billion people who make up 60 percent of the entire population of the planet. Despite significant progress in reducing poverty in the last 20 years, recent evidence suggests that the pace of global poverty reduction is now slowing.

Women and girls are most affected by economic inequality. Irish women spend 38 million hours a week on unpaid care work, contributing at least €24 billion to the economy every year – the equivalent of 12.3 percent of the entire annual Irish economy. Globally, women do more than three-quarters of all unpaid care work. Women and girls are putting in 12.5 billion hours of unpaid care work every day, which amounts to a contribution to the global economy of at least $10.8 trillion a year – more than three times the size of the global tech industry. Countless more, both in Ireland and around the globe, are paid poverty wages for care work.

Last April, the Irish Government launched A Better World, an ambitious statement of intent on how Ireland’s Official Development Assistance (ODA) programme can help create a better, fairer, more peaceful and sustainable world. ODA plays a crucial role in reducing poverty and alleviating vulnerability, as well as responding to rising inequality, increased climate-related disasters and the migration and refugee crisis. However, Ireland still has some distance to travel to reach its target of spending 0.7 percent of national income on ODA.

Involuntary migrations continue apace, with over 70.8 million people being forced to leave their homes due to conflict, persecution and disaster. Ireland has been complicit in a failed system of migration management with the prioritisation of border security over the needs of vulnerable people. Ireland needs to reform its migration policies by sharing the responsibility for hosting refugees and ensuring that refugee family members are united in this country. We must adopt a migration system that is based on human rights and international law – one that promotes inclusivity, transparency and accountability.

 

To address these issues, we are calling on the next Government to:

  • Increase Ireland's development aid budget to 0.7% of national income by 2025
  • Implement faster, fairer climate action to meet Ireland's commitments to address the climate emergency and support poorer countries to cope with climate change
  • Support sustainability through developing the circular economy
  • Invest in our care system to help address gender inequality
  • Support a fundamental reform of the global corporate tax system
  • Protect those seeking refuge and keep their families together
  • Pass legislation to ensure that companies adhere to human rights principles

 

You can find details of all these asks in our General Election 2020 manifesto.

Michael McCarthy Flynn is Senior Research and Policy Coordinator for Oxfam Ireland.

Our Asks to Politicians - 2020 Election

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10 brilliant questions you asked about Oxfam’s inequality report

Oxfam’s new inequality report, which reveals that the world’s billionaires — just 2,153 people — have more wealth than 4.6 billion people, is making headlines across the globe. Since we launched our report, we have received lots of interesting questions. Here’s our response to ten of the most frequently asked questions.

woman in poverty is underpaid domestic worker
Clarice is proud to be a domestic worker but was frustrated and angry at the bad treatment by employers. Clarice is now an active member of a group that supports each other and improves their community. Photo: Katie G. Nelson/Oxfam

1. What does women’s unpaid care work have to do with billionaires? How is it their fault?

Women and girls together put in 12.5 billion hours of unpaid care work every day and countless more for poverty wages. Care work is what makes all other work possible —without it the economy and the businesses of billionaires wouldn’t be able to function.

Yet billionaires and the corporations they run are not paying their fair share of tax and are depriving governments of revenue that could be invested in public services and infrastructure that could help free up women’s time and help put an end to poverty and inequality. Oxfam estimates that getting the richest one percent to pay just 0.5 percent extra tax on their wealth over the next ten years could fund investments needed to create 117 million jobs in sectors such as elderly and childcare, education and health.

2. Is Oxfam suggesting that women should be paid to take care of their own children and cook their own meals?

No. We’re pointing out that women do more than three-quarters of all unpaid care work and this is trapping them in poverty.

We are calling on governments to lift the responsibility of care from women by investing in infrastructure and public services — paid for by fairer tax systems. For example, providing access to improved water sources could save women in parts of Zimbabwe up to four hours of work per day, or two months a year.

And we are asking governments and companies to help challenge the attitudes and practices that prevent care work from being shared more equally between men and women. For example:

  • Policies — Policies like paid parental or family leave and flexible work arrangements enable employees to manage care responsibilities. Providing childcare can help women enter the workforce, take on more hours or pursue the career they really want (and even reduce the gender pay gap!).
  • Advertising — Advertising can be used to encourage men and boys to take on a more equal share of unpaid care work. For example, McCain Foods’ We Are Family campaign shows that it is normal for all family members, including fathers and grandfathers, to do unpaid care work.
  • Laws — The UK Government has introduced a landmark ban on advertisements that portray gender stereotypes likely to cause harm, or serious or widespread offence. 

Check out Oxfam’s Care Calculator to work out much how much the care work you do is worth.

3. The fact women do more unpaid care work than men is a cultural problem — it has nothing to do with government policy.

It has everything to do with government policy! If governments ensured the richest people and corporations were fairly taxed and invested this money in vital public services and basic infrastructure such as water and energy systems, they could help lift the responsibility of care from women.

Governments and companies can also help challenge negative stereotypes such as the belief that women are ‘naturally’ better carers or that housework is ‘women’s work.’ Uruguay’s Care Act, introduced in 2016, is celebrated as a model for the future of care — it has boosted care services for children, people with disabilities and the elderly while breaking down gender stereotypes.

4. Isn’t capitalism working? The global economy is growing, and poverty is declining.

A healthy market economy is key to tackling poverty and inequality, but we don’t have that. We have an extreme form of capitalism that only works for those at the top.

The number of people living in extreme poverty (less than $1.90 a day) has fallen globally, which is to be celebrated. However, the rate at which extreme poverty is being reduced has halved since 2013 and in some parts of the world the number of people living in extreme poverty is actually rising. Almost half of humanity is still living on less than $5.50 a day. They are not living in extreme poverty, but they are still very poor — struggling to keep their heads above water and just one medical bill or failed harvest away from extreme poverty.

The problem is that the benefits of economic growth are not shared equally. Wealth is captured by the wealthy, and the poorest in society see little benefit. That is why Oxfam is calling for governments to build more human economies that work for everyone and not just a privileged few.

5. Aren’t low taxes a good thing? They stimulate economic growth and job creation — benefiting society as a whole?

The idea that low taxes for the richest are good for economic growth and job creation has been widely questioned. Even the International Monetary Fund and The Economist in the UK say there is scope to tax the richest without hurting economic development —and that such a redistribution is needed to tackle poverty and inequality.

A strong economy depends on an educated and healthy workforce, good transportation connections, a strong communications network, and the rule of law —all these things are paid for with our taxes. That is why it is essential that everyone in society pay their fair share.

Time to Care: Let's #FightInequality

6. Increasing taxes on the wealthy alone won’t be enough, and even if you manage to do it, it doesn’t mean the money will be spent well by governments.

Fairly taxing wealth and simultaneously cracking down on tax havens and loopholes that allow corporations and the super-rich to dodge taxes are important ways in which countries can raise additional funds. Many countries need to raise additional funds so that they can increase investment in public services and infrastructure like water or electricity — and it’s hard to think of a country where additional revenue would not make a difference.

That said, there is no guarantee that increased tax revenues will be spent tackling poverty and inequality. This is partly because inequality is undermining our democracies — as governments put the demands of powerful corporations and the super-rich over the needs of their own citizens.

Transparency and accountability are critical. Oxfam is working with others around the globe to hold governments to account for how they spend public funds. In Kenya, the National Taxpayers Association uses scorecards to help communities follow money flows, monitor the quality of public services and hold their public officials accountable.

7. What are wealth taxes, and don’t they mean bigger tax bills for ordinary people? Aren’t people taxed enough?

Not everyone is taxed enough! Many super-rich individuals agree. The richest in society are being massively undertaxed and are paying lower rates of tax now than they have in decades. Only 4 percent of tax revenue collected globally comes from taxes on wealth.

Wealth taxes are levied on wealth or the income derived from wealth. They include property tax and inheritance tax. If properly structured, these taxes would be paid by only the very richest in society —and are an important way of ensuring the wealthy pay a fair share of tax. For example, Colombia introduced a wealth tax in 2015 on all those with wealth over one billion Colombian pesos, or $315,000.

8. Poverty is decreasing so why all the fuss about inequality? Inequality doesn’t fuel poverty.

Inequality is trapping people in poverty. The World Bank has been clear that unless we close the gap between rich and poor, hundreds of millions of people will still be living in extreme poverty by 2030

Women and girls are often amongst the most disadvantaged because poverty is sexist. 

In a poor rural area of Pakistan, girls are three times more likely than poor boys to miss out on an education. Pulled out of school before their brothers, often because of unequal care responsibilities, millions of the world’s poorest girls are deprived of the opportunities that a decent education can bring.

By closing the gap between rich and poor — more fairly taxing wealth and investing this money in public services like education, healthcare and childcare — governments can ensure no child misses out on a better future simply because they are poor.

9. Oxfam’s calculations are wrong —the data has holes in it and the way wealth is calculated means graduates with large debts but the potential to earn a good salary are counted amongst the worlds poorest.

It is true to say that the way wealth is calculated means people who are high earners with large debts — such as graduates with big loans — are placed in the same category as people who are very poor. However, this is the case for such a tiny fraction of people, it has little impact on the figures. The vast majority of people at the bottom of the economy are very poor people who are really struggling to get by. Those who are in debt are, overwhelmingly, poor people who are forced to borrow to stay afloat — think of single mothers having to borrow money at exorbitant rates to pay medical bills in the United States, or smallholder farmers in India borrowing at huge interest from money lenders in order to buy seeds or tools.

Oxfam’s calculations are based on the most up-to-date and comprehensive data sources available — the Credit Suisse Research Institute’s annual Global Wealth Databook and Forbes’ 2019 Billionaires List. However, no data set or methodology is ever 100 percent perfect and figures may change slightly from year to year as new and better data becomes available. However, over the long term the data clearly shows that the gap between rich and poor is out of control. The world’s billionaires, an ultra-rich elite of 2,153 people, have more wealth than the 4.6 billion people who make up 60 percent of the planet’s population. Our economy is broken — we need to fix it.

10. The changes in wealth that Oxfam highlights are not real changes in wealth —but are more to do with changes in the availability of data or the assumptions of researchers.

Data on wealth inequality can change considerably from one year to the next and can lead to significant variations in the statistics on wealth inequality. For example, if China — home to a billion people — issues a new report on wealth, it can make a major difference to the figures from one year to the next. However, over the long term, the data clearly shows that inequality has risen dramatically in the majority of rich countries over the past 30 years and is very high in the majority of developing countries.

What You Can Do Now

Global Care Calculator: How the numbers are stacked against women and girls

Joanne O’Connor is Content Executive for Oxfam Ireland – here she recounts her eye-opening results from using the Global Care Calculator.

This week, our Time to Care inequality report made one thing clear: across the world, women and girls make our economies thrive but the vital care work they do often goes unrecognised and unrewarded. That they are responsible for more than three-quarters of unpaid work globally, clocking up a staggering 12.5 billion hours of unpaid work every day, came as a shock for many.

That surprised me. Don’t we all know women who work tirelessly in the home or juggle family life with a career or other responsibilities?

In countries where Oxfam works, the women who cook, clean and care for their family also walk for miles to collect basics like water and firewood. All this hard work goes unrewarded and can trap women and girls in a cycle of poverty. Pursuing an education or a paid job is a pipe dream.

Shop owner Arlene Cinco is a mother of four who also cares for her husband Eduardo, who suffered a stroke in 2016. Photo: Jed Regala/Oxfam

I know how lucky I am. I have a job which pays a salary. I don’t have to collect water from a contaminated stream or risk my safety while searching for firewood miles from home. But I do cook, clean and care for my family every day – and all those hours of unpaid care work add up.

In Ireland, women put in 38 million hours of unpaid care work every week. If women received a living wage for this work, it would cost the State approximately €24 billion. On Monday, after Oxfam’s report was released, I decided to use the Global Care Calculator to calculate how much my care work is worth – how much my second job of caring for my family and all the housework that comes with it contributes. The figure was somewhere in the region of $63,000 a year – or almost €57,000 for about 5,700 hours’ work.

I was stunned. It had to be a mistake. So, I did it again and gave my answers more consideration. (Disclaimer: it’s difficult to quantify, as the calculator asks, how many hours you spend ‘caring for and organising activities for children or others who depend on you’ or providing ‘emotional support for people who depend on you’. It begs the question: is it possible to clock off once your child has gone to bed? Or does comforting your child after a 4am nightmare count as overtime?)

The second attempt would be more accurate, I decided. When the results came in, the total value of the ‘additional’ hours I worked was an even bigger eye-opener. This time, I ‘made’over $97,000 (over €87,000) for 8,840 hours.

The results of theGlobal Care Calculator

Now than I know the value of my unpaid work, I’ll be watching closely the upcoming Citizens’ Assembly which will discuss issues around care and gender inequality. In the run-up to the Assembly, Oxfam Ireland is calling for changes to social employment policies that support carers as well as proper scrutiny of the impact that economic and taxation polices have on women and girls. We want to see more paid shared parental leave or reforms to the pension system that would mean that women don’t miss out if they have to leave the work force to care for a loved one. Ireland desperately needs high-quality care services, resourced by care staff that are paid a living wage.

Otherwise, the notion of who cares wins remains the stuff of fiction.

Joanne O’Connor is the Content Executive for Oxfam Ireland.

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