MULTINATIONAL corporations and wealthy individuals skirting their tax responsibilities cost the Philippines some $4.15 billion in lost revenues annually, according to the 2021 State of Tax Justice Report.
The total cost of the tax leakage is equivalent to 99.96 percent of the country’s health budget. This could have been used for the full Covid-19 vaccination of 241.2 million Filipinos or 232.94 percent of the Philippine population, the report stated.
Of the total revenue losses, some $3.93 billion are due to global “tax abuse” committed by multinational corporations and $220.4 million are attributed to global “tax evasion” committed by private individuals.
“As the Covid crisis has reminded the world, tax justice is essential for our health. To overcome AIDS, overcome Covid-19, and ensure health for all, countries need secure revenue, generated progressively,” Winnie Byanyima, executive director of UNAIDS and undersecretary-general of the United Nations, said in the report’s Foreword.
“When unfair rules and practices prevent them from doing so, as they do right now, the consequences include preventable deaths, and a dangerous failure to beat pandemics,” she added.
The data also showed that the total lost revenues due to global tax abuse in the country is equivalent to 9.4 percent of its tax revenues and $40 lost annually by every Filipino annually.
Based on the report, the Philippines is the most vulnerable to illicit financial flows due to direct investments, making it even more vulnerable compared to the regional average.
The report said the countries that were considered “more responsible” for the Philippines’s vulnerability to illicit financial flows are Japan, the Netherlands and the United States.
“Despite commitments by OECD members on curbing global tax abuse, OECD members were found to be responsible for facilitating 78 percent of the tax losses countries suffer a year. OECD members facilitate the handing of over $378 billion a year from public purses around the world to the wealthiest multinational corporations and individuals,” the Tax Justice Network said in a statement.
The Tax Justice Network explained that illicit financial flows are transfers of money from one country to another that are forbidden by law, rules or custom.
By enabling money laundering and corruption and by reducing government funding available in a country, illicit financial flows damage economies, societies and the governance of countries around the globe, it said.
Meanwhile, of the 10 Asean countries, Singapore had the highest leakages at $4.28 billion. However, as a percentage of GDP, it is tied with the Philippines in first place as the amount of lost revenues account for 1.3 percent of their respective GDPs.
After Singapore and the Philippines, other Asean countries that saw high tax leakages were Indonesia with $2.28 billion or 0.2 percent of its GDP; Thailand, $1.67 billion or 0.4 percent of GDP; and Vietnam, $1.5 billion or 0.7 percent of GDP.
“Research shows that in general, states that are more reliant on tax tend to spend higher shares of tax revenue on health; and this spending tends also to deliver better health outcomes and better health coverage,” the report stated.
“The results are typically stronger in relation to progressive, direct taxes such as those on incomes, capital gains and profits, suggesting at least a positive correlation with political preferences to curtail inequality,” it added.
The Tax Justice Network, which published the report together with the Global Alliance for Tax Justice and the global union federation Public Services International, said countries are losing a total of $483 billion in tax a year to global tax abuse committed by multinational corporations and wealthy individuals.
Tax Justice Network said this is enough to fully vaccinate the global population against Covid-19 more than three times over.
Of this amount, some $312 billion is lost to cross-border corporate tax abuse by multinational corporations and $171 billion is lost to offshore tax evasion by wealthy individuals.
“The $483 billion lost to tax havens a year is the tip of the iceberg. It’s what we can see above the surface thanks to some recent progress on tax transparency, but we know there’s a lot more tax abuse below the surface costing magnitudes more in tax losses,” Tax Justice Network data scientist Miroslav Palanský said.
Tax Justice Network said the $483-billion loss consists only of direct tax losses or tax losses that can be observed from analyzing data self-reported by multinational corporations and from banking data collected by governments.
The report did not include indirect losses such as the chain-reaction losses that arise from tax abuses accelerating the race to the bottom and driving tax rates down globally.
‘Tax leaks from MNCs, the rich cost PHL $4B’
Source: News Paper Radio
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