A global issue that must be faced internationally, how can we put pressure on our government to make headway in this vital area?
Tax Justice is one of the most important economic campaigns of our generation. The vast wealth hidden in tax havens by multi-national corporations and super-rich individuals is a key contributing factor in global inequality. Tackling tax dodging would help all countries collect the revenues that pay for crucial public services.
The Facts and Analysis
Tax dodging is a global issue, affecting, both developed and developing countries alike and damaging their ability to pay for public services and infrastructure. Christian Aid estimate that developing countries lose $160m every year to tax dodging, while a 2012 study estimated that sub-Saharan countries alone were denied $814bn in tax revenue between 1970-2010. According to Tax Research UK, Britain's tax gap was £119.4bn, dwarfing the UK's current budget deficit by over £30bn. Tax dodging also undermines efforts to relieve global poverty. Global Financial Integrity estimate that 10 times more money flows illicitly out of developing countries than they receive through foreign aid. These illicit financial flows are facilitated by tax havens.
The UK is at the heart of the global tax avoidance industry. It is ranked 15th on the 2015 Financial Secrecy Index, but if it were amalgamated with its Overseas Territories, including Jersey, the Cayman Islands and Bermuda, it would beat Switzerland into 1st place. The City of London Corporation wields excessive influence in the UK's legislative processes. This has led to a laissez-faire approach towards the Overseas Territories and the continued relaxation of our own tax laws. Our Corporation Tax rate, which was 28% in 2010, will drop to 18% by 2019, while weakened Controlled Foreign Companies Laws, according to ActionAid, will cost the UK exchequer £10bn a year, and developing countries £4bn a year, as foreign shareholders easily shift profits offshore.
In Birmingham, Cadbury, once a standard bearer for ethical business practices, is now heavily implicated in tax avoidance scandal. Even before their takeover by Mondel¬ēz International, Cadbury had been avoiding tax through subsidiaries in the Cayman Islands and Ireland, paying just £6.4m in tax per year on average annual profits of £100m between 2000-2010. Since the takeover, however, the problem has escalated. Last year, Mondelēz UK paid 0% corporation tax in spite of £96.5m in UK profits, as interest payments on debt-bonds held in the Channel Islands were written off against profits.
At the heart of the tax justice campaign are two aims. The first of these is to change the narrative used around tax. Instead of being seen as a burden, a cost to be reduced as far as possible, tax should be seen in a positive light, as 'the price we pay for civilisation'. We can help change this narrative by engaging directly with companies in the form of boycotts and letter-writing, to show that there is now a reputational risk to engaging in aggressive tax avoidance. Those who have accountants, financial advisors or pension funds can let them know that they do not want to use tax avoidance schemes.
The second aim is to reform laws on global taxation. The current system does not recognise multinational corporations as one entity, instead seeing their subsidiaries as independent entities trading fairly with each other. Through lobbying the UK Government, the European Parliament and other international bodies, campaigners can advocate for the changes needed to rebuild international tax laws. These include; Public Country-by-Country Reporting of financial information, so corporations can be taxed according to where genuine economic activity takes place; Automatic Information Exchange, so that countries can freely request information from other jurisdictions; Public Registers of Beneficial Ownership, so that the ultimate owners of secretive shell companies and trust funds will be made known; and a UN-run international tax body, so that developing countries get a say in international tax legislation.
We want to give people the chance to be involved with each are in four ways. Volunteer time, giving financially, campaign signing/attending, and praying. We hope to present these options simply and clearly, and rather than providing too much text, and to direct people to other organisations websites where possible.
The Birmingham-based Methodist Tax Justice Network is always looking for keen volunteers. The best way you can give your time to help us is through passing the tax justice message on in whatever way you can. With MTJN always happy to provide the necessary knowledge and resources, you could; write a letter to your local newspaper or an article for your church newsletter; lead a service on tax justice; facilitate a small group discussion or bible study; run a workshop or host a public meeting. Simply head to methodisttaxjusticenetwork.nationbuilder.com, or email firstname.lastname@example.org for more information.
Christian Aid (christianaid.org.uk) and Jubilee Debt Campaign Birmingham (http://birmingham.jubileedebt.org.uk/) are also engaging with this issue, and will be happy to receive volunteers.
If you wish to donate to the continued work of the Methodist Tax Justice Network, simply contact us via our email address (email@example.com). Christian Aid (http://www.christianaid.org.uk/give/make-a-donation/) and the global Tax Justice Network (http://www.taxjustice.net/donate-to-tjn/) will also gratefully receive donations towards their work on tax justice.
The Methodist Tax Justice Network has been running a campaign against Cadbury since 2013, but has this put an increased focus on this campaign in 2016 since it was revealed that no UK tax had been paid in 2014/15. You can engage with this campaign by boycotting Cadbury products and/or writing to Mondelez UK's head office. Further details, including an address for letter writing, can be found at http://methodisttaxjusticenetwork.nationbuilder.com/cadbury.
There are also two issues on which it is worth engaging with your local council. The first of these is the ongoing Christian Aid 'Sourced' campaign. Councils spend billions each year on procuring goods and services from private companies - this campaign is asking councils to implement more stringent questions for companies to answer about their tax practices as part of the procurement process. You can read more about the Sourced campaign here: http://www.christianaid.org.uk/ActNow/tax-justice/sourced/sourced-index.aspx
The second local council issue worth campaigning on is business rates. According to the Birmingham Post (dated May 19th), Birmingham businesses owe the city council £40m in unpaid business rates. At a time when Birmingham City Council are struggling to maintain at-risk public services such as libraries and the Children's Services Dept., campaigners should write to their local council representative, or to new council leader John Clancy, and tell them that it is imperative that they put as much effort into reclaiming these unpaid taxes as they do in chasing down the council taxes of ordinary residents.
In terms of broader campaigning, it is useful to stay up to date with the latest tax justice news and progress. You can do this by joining the Methodist Tax Justice Network's mailing list (http://methodisttaxjusticenetwork.nationbuilder.com/join), reading experienced tax campaigner Richard Murphy's blog at http://www.taxresearch.org.uk/Blog/, or listening to the Tax Justice Network's monthly podcast, The Taxcast, downloadable from http://www.taxjustice.net/taxcast/.
Suggested topics for prayer on tax justice would be; for world leaders and politicians to commit to helping reduce inequality, making the right decisions to tackle tax dodging and not protect their vested interests; for those countries struggling to pay for health, education and infrastructure as a result of corporate greed; for the continued success and progress of tax justice campaigners, especially those advocating for crucial changes in world tax legislation; giving thanks for the work of whistleblowers who play a crucial role in revealing the information that leads to change; for the Methodist Church to be a voice for tax justice, and to continue being an advocate for bringing an end to global inequality.
This information was written by Matthew Jones of the Methodist Tax Justice Network. If you are interested in find out more then why not email him here.