Social justice, tax justice and transparency
Krishen Mehta | Former Partner, PwC & Board Member, Tax Justice Network
Tax justice is one of the pathways to social justice. Just as the movement for women’s rights and labour rights, or the right to health care and education are an important element of our social fabric, so is the movement for tax justice. Ultimately, we want to build a just society that serves, protects, and promotes participation of the most vulnerable. Pope Francis began his speech to the UN in 2015 by talking about the need for a foundational imperative of a just economic system for all mankind.
What does this mean in the context of tax and financial transparency? I believe that it needs to have the following components:
When we address the issues above with care and diligence, we will have the resources and the fortitude to take on some of society’s more pressing challenges. As an example, we could better ensure that banks and other financial institutions, subject to complete disclosure of their activities, do not take advantage of people suffering or recovering from a financial crisis. We can work towards trade agreements that can ensure that people with limited financial means can have access to lifesaving medicines. We can prevent austerity measures (that have inequality at their core) from closing schools and hospitals and other public services that are important for society. By taking these steps, we would essentially move from having profit as the primary motivation for our companies (which benefits just a few) to making society the primary beneficiary of a company’s success and wellbeing.
Tax and financial transparency therefore has its origin in our natural desire for a just and fair economic system. As we move towards such a system, we respond to the challenge asked of us by Blaise Pascal, when he said that “justice and power must be brought together, so that whatever is just may be powerful, and whatever is powerful may be just.”
What does this mean in the context of tax and financial transparency? I believe that it needs to have the following components:
- Can large multinational companies be obliged to pay their fair share of taxes in countries where their economic activity actually occurs? This can best happen if they are taxed as single entities, rather than as a group of separate entities.
- Can we stem the abuse of shell companies and tax havens that enable companies and the financial elite to move their profits away from where their profits occur? Can we expect more from the lawyers and accountants who help make that possible?
- Can country-by-country reporting be a required public disclosure for all publicly held companies, so that the public itself can be a judge of the ethics and values of the companies in which they invest?
- Can automatic exchange of information be a matter of normal practice among all jurisdictions, so that tax abuse can be stemmed with simplicity and ease?
- Can the beneficial ownership of companies, trusts, and foundations be a matter of public record, so that society can exercise its fiduciary obligation to hold each person or entity accountable to the highest standard?
- Can there be a World Tax Authority that can arbitrate tax disputes between nations, so that developing countries, that are often more vulnerable, are not left at the mercy of the richer multinational companies and of pressure from their countries of residence?
- Can there be a harmonisation of predicate offences, so that a crime in one jurisdiction can be considered a crime in another, and funds from the proceeds of such crime cannot easily be transferred from one jurisdiction to another?
When we address the issues above with care and diligence, we will have the resources and the fortitude to take on some of society’s more pressing challenges. As an example, we could better ensure that banks and other financial institutions, subject to complete disclosure of their activities, do not take advantage of people suffering or recovering from a financial crisis. We can work towards trade agreements that can ensure that people with limited financial means can have access to lifesaving medicines. We can prevent austerity measures (that have inequality at their core) from closing schools and hospitals and other public services that are important for society. By taking these steps, we would essentially move from having profit as the primary motivation for our companies (which benefits just a few) to making society the primary beneficiary of a company’s success and wellbeing.
Tax and financial transparency therefore has its origin in our natural desire for a just and fair economic system. As we move towards such a system, we respond to the challenge asked of us by Blaise Pascal, when he said that “justice and power must be brought together, so that whatever is just may be powerful, and whatever is powerful may be just.”
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Championing the role of tax in building a civilised and fair society | Will Snell
Stopping ‘competition’ for corporate investment through tax cuts and giveaways | Sol Picciotto How should we tax the new economy? | Jolyon Maugham An income tax system supporting social spending to reduce gender inequality | Sue Himmelweit Social justice, tax justice and transparency | Krishen Mehta Resourcing and refocusing HMRC | Cathy Cross Requiring companies to calculate and submit figures on deliberately created tax risk | David Quentin The Tax Gap and what to do about it | Richard Murphy Abolishing non-domiciled status | Prem Sikka |
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