News & Media

COP24 – Governments face life and death decisions, says Oxfam

November 30, 2018

Photo: Katie G. Nelson/Oxfam

A global humanitarian catastrophe can still be averted if governments make climate action a priority, said Oxfam today ahead of the UN Climate Change Conference (COP24) in Katowice, Poland from 2 – 14^thDecember.

Oxfam and its partners are already delivering humanitarian assistance to hundreds of thousands of people caught up in deadly floods, storms and droughts, made worse by climate change. This includes a persistent drought in the Horn of Africa that has led to devastating shortages of food and water, affecting at least 16 million people; unusually widespread flooding across Kenya, Somalia and Ethiopia that damaged crops and property and displaced at least one million people in early 2018; and super typhoon Manghut that caused extensive damage across Asia in September – including in the Philippines where 200 mile an hour winds triggered deadly landslides.

Kristen Hite, Oxfam Climate Change Policy Lead for Oxfam said:

“We are already seeing the impact of just one degree of warming – with communities across the globe ravaged by fire, floods and storms like never before. Yet government’s current emissions pledges put us on track for a truly terrifying 3 degrees of warming.”

Climate change is a global threat but it is the world’s poorest and most vulnerable people – those who rely on rain to grow crops, live in poorly built structures in marginal areas, and lack savings or insurance – who are hit hardest.

Even limiting global warming to to 1.5 degrees Celsius could see 100 million more people pushed into poverty according to the Intergovernmental Panel on Climate Change (IPCC). The World Bank has projected that 143million people will be displaced in sub-Saharan Africa, South Asia and Latin America by 2050 without urgent action.

Hite said, “Humanity needs bold, brave leadership and action right now. Countries suffering the worst impacts – like the Marshall Islands – are leading by example. It’s time for the world’s biggest, wealthiest emitters to follow their lead.”

“Governments meeting in Poland must cut emissions faster and further and developed countries must set out how they will mobilise the $100 billion a year they have promised to support climate action in poor countries,” added Hite.

Paradise Papers Scandal – One Year On

November 9, 2018

Just one year ago, 13.4 million leaked files from offshore service providers and company registries were made public.

This leak, known as the Paradise Papers, revealed the tax planning strategies of more than 100 multinational corporations, including Nike and Apple, as well as offshore activities by more than 120 politicians and world leaders.

Like always politicians were quick to react and promise reforms. But so far very little has happened. A new Paradise Papers is to be expected if no serious reforms are undertaken in the coming years. Just recently Zucman estimated that multinationals artificially shift almost half of their total overseas profits – 40 percent – to tax havens.

Tax dodging is fueling an inequality crisis where 82% of the wealth generated last year went to the richest 1% of the global population, while the 3.7 billion people who make up the poorest half of the world saw no increase in their wealth. When corporations and the super-rich dodge taxes, it is ordinary people, and especially the poorest, who pay the price as governments balance the budget by raising their taxes and cutting vital public services. Poor countries are particularly hard hit by corporate tax dodging as they are twice as dependent on corporate tax revenues as rich countries.

Governments must take five immediate steps to stop corporations and the super-rich cheating poor countries out of over $100 billion in tax revenues every year..

Susana Ruiz, Oxfam’s tax advisor, said:“Stopping the tax scandals won’t be easy but it is not impossible if the political will is there. Oxfam’s five-point plan shows how governments can stop the tax scandals if they put the interests of the public over the demands of the super-rich and big business.”

Oxfam’s 5-point plan to stop the scandals calls on governments to:

1. Agree a global blacklist of tax havens based on comprehensive objective criteria and take strong countermeasures including sanctions to limit their use:

Governments have yet to agree an objective global list of tax havens. A farcical OECD – G20 blacklist published in June 2017 features just Trinidad and Tobago. The more comprehensive European Union list, published last December, omits European tax havens such as the Netherlands and Ireland that have been key players in the Paradise Papers scandal.

2. Create a global tax body where all countries can work together on an equal footing to agree the fundamental tax reforms that are needed to ensure the tax system works for everyone:

International tax reforms done little to prevent tax dodging in rich countries and even less in poor countries which were denied any real say in the reform process. Yet OECD and G20 member countries have blocked attempts by poor countries to create an independent tax body where all countries can work together to agree a second round of more fundamental reforms. This would include action to combat damaging tax competition.

3. Rebalance tax deals by making sure tax treaties do not exploit developing countries tax bases:

Poor countries often lose out from unfair tax agreements because they allow multinational companies to avoid paying tax in the country. Yet, international tax reforms led by the G20 and OECD ignored this issue – in part because poor countries were denied any real say in the process.

4. End tax secrecy for the super-rich by establishing a centralized public register of the individuals who own and benefit from shell companies, trusts and foundations publicly available:

Many countries have established registers of ‘beneficial owners but few have made the information publicly available. This means poor countries are unable to access the information to identify tax dodgers.

5. End corporate tax secrecy by ensuring all multinational companies make financial reports publicly available for every country where they operate:

The OECD initiative on country-by-country reporting falls well short of the mark as it does not cover all multinational corporations and it does not require companies to make their financial reports publicly available. This means poor countries are unable to access the information to identify tax cheats. Stronger European proposals on public country-by-country reporting, were due to be agreed this year, but are being blocked by EU member states such as Germany, Ireland, and Luxembourg.

Do You Remember The Paradise Papers?

November 5, 2018

Last year, the Paradise Papers laid bare the extent to which multinationals and extremely wealthy individuals exploit a broken global system.

This system allows them to avoid paying their fair share of tax which contributes to poverty and inequality around the world. One year on, it is clear we still need to do more.

The Paradise Papers revealed the murky world of tax avoidance. Global corporate giants, celebrities and politicians were exposed for stashing away their low tax/untaxed wealth instead of paying their fair share of taxes in the countries where they earned that wealth. This is money that poor governments could have invested in roads, schools, and hospitals to help their people escape poverty.

And it’s not the first time this broken tax system has been exposed.

A recent history of scandals

In 2014, the International Consortium of Investigative Journalists (ICIJ) revealed how more than 340 companies secured secret deals from Luxembourg allowing them to avoid paying billions in tax in the countries they operate. The Lux Leaks scandal – as it became known – described how some companies paid less than 1% of tax on their profits. This occurred by exploiting loopholes in tax laws around the world to avoid paying taxes.

The Panama Papers followed in 2016 and was one of the biggest leaks in the history of journalism. 11.5 million documents showed Panama-based law firm, Mossack Fonseca, at the center of a scandal involving people in more than 200 countries, 241,000 offshore entities and, in some cases, linking to terrible crimes.

The Paradise Papers was another wakeup call. It revealed how multinational corporations – like the four in our latest report – continue to funnel their profits to countries with very low, or no, taxes. This unfair tax avoidance deprives poor governments of much-needed income which they could then invest in the public services their people need to escape poverty.

Somebody pays – and it’s not the multinational corporations

Every hour, 35 women die due to inadequate maternal health care. That’s one every two minutes. And around the world women give up their jobs and essential income to take care of loved ones when the health system fails.

Even though tax avoidance hurts us here in New Zealand, worldwide women and children living in poverty pay the biggest price. When governments don’t have crucial funds to invest in their people, they are forced to balance their budgets by cutting back on the essential services that the poor rely on. Losing out on education and healthcare, women are deprived of the chance to improve their lives and lift themselves and their families out of poverty.

What has changed since the Paradise Papers?

Your stand against tax avoidance has led New Zealand to take positive steps towards addressing these issues within our nation. Our government has expanded the disclosure rules on foreign trusts recommended in the Shewan inquiry, passed the 2018 Tax Neutralization Act, and created the Tax Working Group to examine the structure, fairness and balance of New Zealand’s tax system. This is a great start. But it is not enough.

Multinational corporations still have the resources to exploit a complex global tax system. To fix this broken system, corporations need to publish country-specific financial information also known as Public-Country-by-Country Reporting. Transparency will ensure that poor governments get the revenue they are due, so they can invest in the services that save lives.

Four Crucial Benefits Of Tax Transparency In New Zealand

October 25, 2018

A lack of tax transparency allows multinational corporations to unfairly avoid paying billions in tax. That’s less revenue for vital public services and infrastructure.

Last month we revealed shocking new evidence that four big drug companies – Johnson & Johnson, Pfizer, Abbott and Merck & Co. (also known as MSD)* appear to be using offshore tax havens to avoid paying billions of dollars in tax.

NZ$21 million to be precise, just here in New Zealand.

This happens because the global tax system is like a black-box: it is hard to see what goes on inside. Multinational corporations – like the four above – make use of different rules in different countries, and manipulate these to funnel their profits to countries with very low, or no, taxes (often called tax havens). These countries help multinational corporations to unfairly avoid paying billions in tax.

Why does this matter when this behaviour is not illegal?

When big, multinational corporations unfairly avoid paying tax, they starve governments from the revenue they need to provide public services – like healthcare and education – which the poor rely on. This behaviour is unfair and irresponsible.

What does transparency in our tax system actually looks like?

What Oxfam is asking for is something called public Country-by-Country Reporting (pCBCR). This is short-hand for making multinational corporations publish key financial information about their operations in every country where they work. This information should include revenue, profits, tax paid, employees and assets. Because multinational corporations work across the world, and shift their profits across the world, we need country-specific information to be able to compare what they are doing in each country and make sure it is fair.

This approach has four crucial benefits for a transparent tax system:

1. It dissuades multinational corporations from moving their profits around improperly and artificially. If they know they are being watched, they are less likely to act unfairly.

2. It ensures that all tax authorities, including those in developing countries, have access to the data. If reporting is not public, there is a definite risk that developing countries will struggle to get this information.

3. It allows investors, customers and company employees to properly assess the risks the multinational corporation could be exposed to and helps to maintain global financial stability.

4. Public information enables media, civil society organisations and the public to hold large multinational corporations to account. This is part of a well-functioning democratic process.

The results

If multinational corporations know that they’re under proper scrutiny, they will think twice before attempting irresponsible practices. This will result in a fairer share of tax being paid, which governments can spend on vital public services like hospitals and schools. This helps to reduce the barriers of inequality that keep millions of people trapped in poverty.

The European Commission found that public country by country reporting was likely to boost, not harm, economic growth. Having more multinational corporation financial information in the public domain would provide more certainty for investors at a time when so many other aspects are uncertain. Many investors in multinational corporations – such as Legal & General Investment Management Limited and Norges Bank Investment Management – are also calling for public country by country reporting.

Public country by country reporting is already mandatory for financial companies in the European Union. A number of companies such as Vodafone, Unilever and Barclays are already voluntarily providing more information about their tax practices.

This is the way a progressive tax system works; a system that benefits those who need it the most, not just a few.

The Commitment to Reducing Inequality Index 2018

October 9, 2018

In 2015, the leaders of 193 governments promised to reduce inequality under Goal 10 of the Sustainable Development Goals (SDGs).

Without reducing inequality, meeting SDG 1 to eliminate poverty will be impossible. In 2017, Development Finance International (DFI) and Oxfam produced the first index to measure the commitment of governments to reduce the gap between the rich and the poor. The index is based on a new database of indicators, now covering 157 countries, which measures government action on social spending, tax and labour rights – three areas found to be critical to reducing the gap.

This second edition of the Commitment to Reducing Inequality (CRI) Index finds that countries such as South Korea, Namibia and Uruguay are taking strong steps to reduce inequality. Sadly, countries such as India and Nigeria do very badly overall, as does the USA among rich countries, showing a lack of commitment to closing the inequality gap.

The report recommends that all countries should develop national inequality action plans to achieve SDG 10 on reducing inequality. These plans should include delivery of universal, public and free health and education and universal social protection floors. They should be funded by increasing progressive taxation and clamping down on exemptions and tax dodging. Countries must also respect union rights and make women’s rights at work comprehensive, and they should raise minimum wages to living wages.

The Commitment to Reducing Inequality Index 2018 – Summary.PDF
The Commitment to Reducing Inequality Index 2018 – Full Report.PDF
The Commitment to Reducing Inequality Index 2018 – Methodology.PDF

Political leaders must wake up to the danger of climate change

October 8, 2018

Cyclone Winston devastated Fiji in 2016, including the village of Nayavutoka, in Ra province. The local church, pictured, served as emergency shelter for the whole community during the ferocious storm. Photo: Alicja Grocz/Oxfam

Two and a half years ago I sat barricaded inside my home in Fiji, listening to a ferocious wind travelling at an average speed of 230 kilometres an hour.

Over the howl of the wind I could hear trees crashing down outside. I didn’t know how long the storm was going to last. I didn’t know where the next tree would fall.

When the wind finally eased, I ventured outside to see if my neighbours were OK; to see if their houses were still standing. I’ll never forget that feeling.

Cyclone Winston was the biggest cyclone ever to make landfall in the Southern Hemisphere. The devastating storm left 44 people dead and 350,000 people, almost 40% of Fiji’s population, were affected. Total damage and losses from Winston are estimated at $1.42 billion: equivalent to nearly a third of Fiji’s GDP.

Anyone who’s been watching the news recently knows that Cyclone Winston wasn’t a one off. Already this year we’ve witnessed killer storms raging around the world from the Philippines to the USA, wreaking death and destruction.

Today marks a seminal moment in efforts to tackle climate change. The Intergovernmental Panel on Climate Change produced its first major report in four years outlining what’s going to happen if the world allows average temperatures to increase more than 1.5 degrees Centigrade.

Here in the Pacific Islands, we don’t need climate scientists to tell us what the impacts of climate change will be. We’re already experiencing them. We’re no longer talking about the future; people are already fighting for their lives against disasters intensified by climate change.

Most of us who are being battered by climate change are based in some of the world’s poorest countries. At Oxfam, we understand well the ruthless inequality of climate change: poor communities are five times more likely to be displaced by extreme weather than rich ones.

For us, rising seas, combined with more intense storms, are increasing coastal erosion and inundation. By one estimate, in the long term, sea-level rise resulting from 2°C of warming could submerge land across the world that is currently home to 280 million people.

The world’s atoll nations face a truly existential threat from sea-level rise; for us, our lives and our very way of life, is in the balance.

Take the situation my fellow Pacific Islanders in Kiribati face as an example. Kiribati is a large ocean state comprised of 32 atolls and one raised coral island, spread across more than a million square miles of the central Pacific Ocean, and with a population of approximately 110,000.

Almost the entire land area of Kiribati, including the whole of the main population centre of South Tarawa, lies less than three metres above sea level. Kiribati is considered one of the most vulnerable countries on earth to the impacts of climate change.

The nation’s people, the I-Kiribati, fear not only the loss of their livelihoods and security but also the impact of displacement on their culture and identity, sovereignty, and deep connection to their land and sea.

Tinaai Teaua, a member of Kiribati Climate Action Network, told Oxfam: “Land is very important. We can’t leave. We don’t want to leave. This is our home and this is our land. We should stay here. But the problem is getting closer and closer. My message to the world [is] to look at us. What our culture is like. How we are so proud of being I-Kiribati. The main message is to limit warming to 1.5°C. That was already agreed, but now they have to live up to their words.”

The case of Kiribati highlights the need for stronger international action to minimise the impacts of climate change and provide greater support to vulnerable communities. The loss of homes, livelihoods and ancestral lands through displacement epitomises the human cost and the grave injustice of climate change.

Today’s IPCC report is expected to echo the existing consensus that if global warming is to be limited to 1.5°C then concerted, bold, global action is required. Some of the world’s poorest and low emitting countries are now leading the climate fight – including Fiji and the Marshall Islands who recently committed to reduce their emissions to net zero by 2050. It’s time for all rich countries to follow suit and show how they’ll clean up their emissions and reduce their net greenhouse gas emission to net zero within a generation. No excuses.

It’s the laws and targets set by rich countries which will determine the future of the world’s poorest people. Countries like New Zealand have a moral obligation to lead the way.

How many more ‘once-in-a-lifetime’ storms will it take before our leaders face up to what’s going on and act? For too long, too many countries have talked a good game when it comes to climate change, but failed to deliver concrete action.

As many of us know all too well: climate change is eating away shores and flooding homes. It’s leaving farmland bone-dry, shattering the lives of millions who did virtually nothing to cause it. It’s simply unconscionable to leave poor communities alone to deal with disasters they did not create.

The way that New Zealand, and the rest of the international community, responds to climate change is a litmus test for our humanity. It’s a test we can’t afford to fail.

By Raijeli Nicole, Oxfam in the Pacific regional director.