Five Questions on Tax Justice

FIVE QUESTIONS ON TAX JUSTICE By Elisabeth Massute [Whoever wants to fight inequality and poverty must create tax justice and stop tax avoidance. But what does tax avoidance mean? Why does enormous damage occur in poor and rich countries and how can tax justice be attained? This 2017 article is translated from the German on the Internet, www.oxfam.de.] Tax contributions are the foundation for public life and our democracy so the state can fulfill its functions. Schools, streets, hospitals and kindergartens must be funded like projects in environmental protection, independent courts or the police. Public life breaks down without tax contributions. We all profit from tax contributions. That is clear! But what happens when parts of society like multinational corporations shirk from their contributions? For example, Apple paid 0.0005% tax on its profits in Ireland – merely 50 euros on a million euros profits. What drastic tax avoidance! What is hidden behind these dubious practices? We give answers to five central questions on the theme tax justice: 1. What is tax avoidance? Tax avoidance means corporations or individual persons pay as little tax as possible in a legal way, for example, by sinking their wealth in tax havens or shifting their profits in tax havens where they only have to pay an extremely low tax as in the case of Apple. Tax avoidance is often legal because states do not close tax loopholes. Other governments do not cooperate or are unwilling to change anything. 2. Why is corporate tax avoidance so harmful or reprehensible? Corporations dodge their just contribution as part of society through tax avoidance. Like all of us, corporations profit from public goods financed from tax funds. Corporations use the public infrastructures like streets and telecommunication networks and profit from the knowledge and publically-financed training of their co-workers. But they do not share in financing these public goods through tax avoidance.