Campaign Background

Tax dodging and corruption are robbing the poorest people and the poorest nations of vital resources needed to fight poverty and build better societies.

Because these unethical business practices thrive on secrecy and a lack of transparency in the global financial system, the solution involves bringing them out from under the veil of darkness and into the light where they can be overcome. 

The issue

Bribery, corruption and multinational tax dodging, as well as the secrecy and lack of transparency that facilitates them, are a massive barrier to improving the wellbeing of the poorest people in the world. Developing countries lose over US$1 trillion through illicit financial flows each year. 

In the year 2000, All 189 UN member state governments committed to the eight promises of the Millennium Development Goals (MDGs) in order to “free our fellow men, women and children from the abject and dehumanising conditions of extreme poverty”. 

Much progress has been made but the world is still a long way from meeting its commitment to the world’s poor. It has become evident that while aid helps to accelerate progress, corruption acts as a brake. The world cannot deliver on its promises unless we address the issue of corruption head on.

We've been asking the leaders of the world's most economically powerful nations, the G20, to take practical steps that promote greater transparency in the financial affairs of business, government and individuals. Together we can encourage them to address problems of financial secrecy, with a particular focus on curbing multinational tax dodging.

What is tax dodging and how does it harm the poor?

Contrary to popular misconceptions, most of the money flowing out of developing countries is not stolen by corrupt politicians and dictators, but by large multinational corporations who exploit loopholes in the global tax system to shift their profits away from the countries they operate within in order to avoid paying tax. 

Tax dodging is essentially the aggressive action and schemes used by individuals and companies to reduce their tax bills. This may include hiding true assets, or recording profits and transactions in different places (regardless of where the economic activity actually took place) in ways that reduce the eventual tax bill. More about how multinationals avoid paying tax here.

The difference between legal and illegal activity is often hard to discern and lawyers and accountants exploit these grey areas. Many countries’ tax authorities are not able to investigate or successfully prosecute cases that may be illegal. In addition, some governments actively seek investment by offering very low rates of tax and guaranteeing secrecy – over 30 nations or states are tax havens.

While all countries are being robbed of revenue through multinational tax evasion, it is developing countries which suffer the worst.

Christian Aid estimated that in 2008 more than 160 billion dollars was lost from developing countries due to just two forms of illegal corporate tax evasion. This is more money than they receive annually in aid!

If developing country governments had access to these stolen funds and spent this money in exactly the same proportion as the rest of their spending, Christian aid estimates that some 350,000 children could be saved each year.

In fact, every $100 million recovered from tax dodging and corruption could fund full immunisations for 4 million children, provide water connections for some 250,000 households, or fund treatment for over 600,000 people with HIV/AIDS for a full year (United Nations Office on Drugs and Crime).

Tax is the primary, sustainable source of income for developing nations to tackle poverty and provide essential services to their citizens such as health care, education, aged care, clean water and roads.

When multinational companies and wealthy individuals avoid paying taxes, everyone else (including the poor) has to either pay more tax or go without essential services. The impact on developing countries is devastating, denying them the money they need to be self-sufficient and making them dependent on aid and debt. Putting an end to tax dodging and corruption will help in the fight against poverty. 

Read personal stories which highlight the injustice of the global tax system here.

How can we stop multinational tax dodging? 

The global tax system is broken. The first step toward fixing it is to promote greater transparency in the global financial system and help lift the veil of secrecy.Greater transparency and availability of information will help to bring these practices out of the darkness and into the light, where they can be overcome.

Many G20 nations have started to put measures in place to prevent tax evasion in their own countries, however they can and should do more to assist developing countries with the problem. 
Members of the G20 can push for changes to international tax rules that will assist developing countries fight corruption and tax dodging. (Australia had a particular opportunity to show leadership in this area through its role as host and chair of the G20 in 2014.)

We are calling on the government to implement the following measures which will achieve greater transparency in the global financial system:

A)    Automatic Exchange of Information

Establish mechanisms to facilitate access for all developing countries (not just the largest countries) to automatic sharing of information between tax authorities around the world so that governments are more easily able to detect tax dodging or theft of public money. They must also provide direct support to poorer nations to ensure that their tax authorities are able to make use of this system.

B)    Beneficial Ownership

Establish public registers listing the true owners and beneficiaries of companies, trusts and foundations in all G20 countries, and work with the OECD to ensure that other nations do so as well. Secrecy about owners and beneficiaries of these entities in tax havens makes it almost impossible for proper law enforcement with regard to tax dodging. Public registers will help make it harder to use anonymous companies and secret trusts to hide proceeds of corruption & tax dodging.

C)    Country by Country reporting

Establish a standardised global approach for reporting by multinational corporations – ensuring companies provide a global report on their operations – including sales, profits, taxes due and paid, purchases, number of employees, assets, purchases, labour costs and financing costs – broken down for each country they operate in.

Find more details on these three policy asks here.

How can we make a difference?

Governments in the G20 are already taking steps towards tackling global corruption and tax dodging. However, there is a risk that these actions will only help wealthy and more powerful nations and fail to include and benefit the world's poorest countries who need ttheir ax revenue the most.

By speaking out, we can encourage and pressure leaders to ensure tighter rules are in place to clamp down on corruption and plug the leaks in the global tax system. The more we join together in speaking out to governments, the greater the impact we have. 

Find out what difference we have already made in our tax justice campaigning here.