New Report Shows Countries Lose $427 Billion Annually to Tax Avoidance and Tax Evasion
Washington, DC — Taxpayers around the world lose at least $427 billion annually to individual tax evasion and multinational corporate profit-shifting, undercutting public funding for a COVID-19 response, according to evidence in the inaugural “State of Tax Justice” report released today by the Tax Justice Network, in collaboration with Public Services International and the Global Alliance for Tax Justice. The FACT Coalition is a member of the Global Alliance for Tax Justice.
The report included the following findings:
- Taxpayers lose at least a total of more than $427 billion in taxes collected each year to international corporate tax abuse and private tax evasion.
- The money lost to global tax abuse costs countries altogether the equivalent of nearly 34 million nurses’ salaries every year, or one nurse’s annual salary every second.
- The United States faces the largest revenue loss due to international tax abuse.
- The United States ranks in the top five countries responsible for other countries’ tax losses; generally speaking, rich countries are responsible for 98 percent of global tax losses.
- The budgetary impact of international tax abuse hits poor countries hardest: for instance, tax losses in lower income countries were equivalent to nearly 52 percent of their total combined public health budgets, compared to that of just 8 percent combined in higher income countries.
“The COVID-19 pandemic further exposes how a decades-long race to the bottom on taxes has rendered public coffers empty and governments ill-equipped to respond to crises,” said Ian Gary, executive director of the FACT Coalition. “World leaders must put an end to the financial secrecy and offshore tax haven abuse that deepen global poverty and undercut faith in democratic norms and institutions. The U.S. mandate from this report is clear: reforms must start with equalizing the tax rates on foreign and domestic profits, closing incentives to shift wealth to tax havens, and introducing transparency initiatives to ensure corporations and the wealthy play by the rules.”
“The reason frontline health workers face missing PPE and brutal understaffing is because our governments spent decades pursuing austerity and privatization while enabling corporate tax abuse,” said Rosa Pavanelli, general secretary at Public Services International. “When tax departments are downsized and wages cut, corporations and billionaires find it even easier to swindle money away from our public services and into their offshore bank accounts. The only way to fund the long-term recovery is by making sure our tax authorities have the power and support they need to stop corporations and the mega-rich from not paying their fair share. The wealth exists to keep our societies functioning, our vulnerable alive and our businesses afloat: we just need to stop it flowing offshore.”
The inaugural State of Tax Justice report draws on data that was privately self-reported by multinational corporations to tax authorities on a country-by-country basis and published in July 2020 by the Organization for Economic Cooperation and Development (OECD), after the data was aggregated and anonymized. The FACT Coalition and its partners have campaigned for reforms in the United States and internationally to make this data publicly available on a country-by-country basis to help with further analysis.
Note to the Editor:
- Click here to read the “State of Tax Justice” report and read the U.S. country level summary.
- Click here to read our latest FACT Sheet on U.S. the labor implications of international tax abuse.
- Click here to read our latest FACT Sheet on the need for U.S. reforms to require public country-by-country reporting of key financial information.