• Getting one over on the taxman

    Posted by John

    28 June, 2012

    Each year at tax time we sit down at the kitchen table with our pile of papers, take a deep breath, puff out our chest, and then dive head first into an imaginary battle with the proverbial tax man. Perhaps we personify the taxman sitting across the table trying to bleed us for every dollar we’ve got. When the tax cheque arrives in the mail and it’s bigger than we thought it was going to be, we smile and indulge in a fair measure of self-congratulation at having ‘beaten the tax man’.
    This tax-time battle is a common experience, but many people aren’t aware that a similar battle is now also being played out on a mass scale on the global stage. The practice of tax dodging by multinational corporations and wealthy individuals is now extremely widespread across the globe and, sadly, also reasonably widely accepted. Some multinational corporations are investing significant sums of money in elaborate schemes to ‘beat the taxman’.

    On both the individual and the global scale, the rationale goes, ‘if I can beat the system to avoid paying taxes, thereby maximising profits, how can that be a bad thing?’ Of course, most would not condone the blatant breaking of the law (commonly called tax evasion) but if you can beat the taxman within the letter of the law (commonly called tax avoidance) all power to you.
    However, it only takes a cursory consideration of the consequences of this burgeoning tax dodging system to see that when the tax dodgers win, someone else is losing out.
    I’m no economist, but basic economic theory tells me that where there is profit for one person or group of people, there is generally an associated cost to another person or group of people. Sometimes the people bearing the cost get something of value in return.
    But in the case of tax dodging, there is no value to the people bearing the cost and often it is the poorest and most vulnerable people in our world who are suffering the negative consequences. The rich are getting richer and the poor are missing out. That should be cause for serious concern for Christians.
    For some seven years now Christians in this country have joined together under the banner of Micah Challenge to call on our nation’s leaders to increase the quantity and quality of our aid program. The advances we have made have saved many thousands of lives. The problem is that while aid is accelerating progress toward development, corruption in the form of tax dodging is acting as a brake.
    Christian Aid in the UK estimates that at least $160 billion in tax revenues are lost from developing countries every year through tax evasion. If that money was spent in the same proportion as existing tax revenues in those countries, it could save the lives of 350,000 children under the age of five each year.
    Contrary to popular stereotypes, corruption has more to do with western bankers, lawyers and accountants than corrupt dictators. Multinational tax dodging accounts for approximately 65% of worldwide illicit financial flows, whereas corruption and bribery account for less than 5%.
    The companies in question make profits by doing business in developing nations. They use roads and infrastructure, police forces and communications systems that are paid for by local taxes. They employ people whose education has been paid for by local taxes. They receive all the benefits of operating in the country, but move their profits out of the country into tax havens, thereby avoiding contributing a fair share of their profits toward the development and maintenance of the services they have used.
    The tax burden to maintain these services then falls back to the local people. If they’re not able to fill the gap left by the companies (as is the case in poor nations), then they go without essential basic services like hospitals, toilets, education and clean water. That’s injustice.
    Tax havens provide a cover of darkness that prevent people in poor communities from calling companies to account for the taxes they pay. Shedding light on the system is the first step to restoring some level of justice to the system.
    As Christians, we should approach the issue of taxation, whether personal or structural, with a concern for others at the forefront of our minds. ‘How can I get the most out of this?’ is not a helpful starting point. Rather, our perspective should be shaped by whether the system is fair, just and helpful for the societies in which we live.
    Whether we like it or not, all Australians are now members of a global economy. Seeking justice in a global taxation system certainly means we seek to ensure that the taxes we pay are fair and appropriate. We also have an opportunity to look beyond ourselves, to use our voices to ensure that others are paying their fair share, and that the money is being used in ways that are just and effective – particularly when it comes to seeing life flourish for the poorest people in our world.


    This article originally appeared in Eternity Newspaper online on 24/06/12. See article here.

    John Beckett (known to most of us as JB) works as the National Coordinator of Micah Challenge. For more about Micah Challenge's recently launched 'Shine the Light' on corruption campaign, click here.