The world’s health workforce could be vaccinated in 36 hours if the pandemic of tax abuse were ended.

The recent Pandora Papers leaks came as a kick in the teeth for the world’s frontline workers. While they have been risking their lives to save lives, economic elites and corporations have continued to pillage from public coffers across the world, weakening governments’ capacity to staff and resource the vital public services we rely on to keep safe.

Yet these latest leaks are just a small piece of the puzzle. The State of Tax Justice 2021 published today by Public Services International, together with the Tax Justice Network and the Global Alliance for Tax Justice, shows that offshore tax abuse costs the world almost half a trillion dollars each year.

That’s enough to vaccinate everyone on the planet fully—three times over. By ending tax dodging, we could fund vaccinations for the entire global health workforce in just a day and a half.

Exacerbating inequality

This broken global tax system is exacerbating the vaccine inequality crisis and prolonging the pandemic for everyone. Lower-income countries on average lose a staggering 48 per cent of their public-health budgets to tax abuse each year. Cash-starved health systems, coupled with unequal purchasing power to acquire vaccines sequestered by monopolies, are fuelling the spread of dangerous new variants, leading to more lockdowns and more deaths around the world.

Unfortunately, many of the same countries in the global north which refuse to waive vaccine patents, such as the United Kingdom and Switzerland, are also watering down efforts to tackle tax havens. Their actions aren’t just morally wrong—they are undermining the entire global recovery.

Fanfare surrounded the recent agreement orchestrated by the Organisation for Economic Co-operation and Development, and accepted by the G20, to curb tax abuse by multinational corporations. This masks the fact that wealthy countries substantially weakened the deal, gifting corporations hundreds of billions of dollars that could otherwise be used to fund public services, climate action and social protections. The deal’s 15 per cent minimum tax rate for the world’s richest corporations is a slap in the face for nurses doing night shifts on Covid-19 wards, who routinely pay a higher rate on their wages.

Moreover, most of the additional tax revenue negotiated under the OECD/G20 deal will go to exchequers in Europe and the United States. Countries in the global south, which lose a much higher proportion of their tax base to tax abuse, will gain very little, if anything, from the new rules.

Multilateral reform

Yet, weak as the OECD/G20 deal is, it is a stark recognition that tax competition and the associated ‘race to the bottom’ can only be ended through multilateral reform. The next step is to raise the global minimum rate to at least 25 per cent and ensure that additional tax revenue flows to countries where economic activity takes place—not just where the multinational headquarters are.

Ultimately, we need a genuinely inclusive, intergovernmental tax body at the United Nations, such as that proposed recently by the G77 group of 134 countries. Fixing the international tax architecture will of course take time—and negotiations must begin immediately. Yet key measures can be put in place right away.

First, we need a wealth tax on the mega-rich, many of whom have seen their portfolios increase dramatically while countless others struggle to survive. Secondly, an excess-profits tax should be imposed on those who have cashed in on the crisis—companies such as Amazon, which directly benefited from smaller, high-street competitors closing up shop to slow the virus’ spread.

Thirdly, unilateral measures are necessary to advance unitary taxation—taxing each multinational in the round, rather than allowing it to lodge profits in low-tax subsidiaries—especially in light of the digitalisation of the economy. Finally, public country-by-country reporting must be immediately introduced, so that we no longer have to rely on leaks, such as the Pandora and Panama papers, to find out what’s really going on.

Political will

For too long, political leaders have claimed that there simply isn’t enough money available to resource our health systems and other public services properly. But, as our new report shows, what is lacking is not resources but the political will to take the necessary action.

It’s time for governments to show the courage worthy of their frontline workers by rejecting the corporate lobbyists and finally pursuing measures that force multinationals and the mega-rich to pay their fair shares. If not now, then when?