Oxfam's dodgy calculations?

 

Fifty biggest US companies stashing $1.3trn offshore

Coca-Cola, Walt Disney, Alphabet (Google) and Goldman Sachs all implicated in Oxfam report.

Hazel Sheffield in The Independent


Coca-Cola is among the companies named by Oxfam


The 50 biggest US companies have more money stashed offshore than the entire GDP of Spain, Mexico or Australia, collectively keeping about $1.3trn (£0.91trn) in territories where the money does not count towards US tax, according to a new report by Oxfam.

The revelations come after the European Commission announced plans to make big companies more transparent about where they pay tax. The charity said the Commission's proposals are “almost useless” for identifying where tax avoidance may be happening. It urged the UK Government to push for stronger rules to ensure that companies pay tax in all countries where they do business.

Robbie Silverman, Senior Tax Advisor at Oxfam, said that tax avoidance in the US will have a knock-on effect in countries around the world.

“The same tricks and tools used by multinational companies to dodge tax in the US are being used to cheat countries across the world out of their fair share of tax revenues, with devastating consequences,” he said.

“Poor countries are particularly hard hit, losing an estimated $100bn a year to corporate tax dodgers. This is enough to provide safe water and sanitation to more than 2.2 billion people,” he added.

In its investigation into the US tax system, Oxfam revealed some of the offshore accounting practices of the biggest companies in the US. Fifty companies including Coca-Cola, Walt Disney, Alphabet (Google) and Goldman Sachs keep a total of about $1.3trn in subsidiary companies registered all over the world, Oxfam says.

The Independent has contacted the companies named above for comment. Goldman Sachs declined to comment, the others did not respond.

The 50 companies are believed to have earned $4trn in profits globally from 2008-2014, but paid only 26.5 per cent of this in tax in the US, below the country’s statutory tax rate of 35 per cent. They rely on an opaque and secretive network of more than 1,600 disclosed subsidiaries in tax havens to stash about $1.3trn offshore, Oxfam said. It added that other offshore subsidiaries may be in use but under the radar of the Securities and Exchange Commission, because of weak reporting requirements.

These same 50 companies collectively received $27 in federal aid-like loans, loan guarantees and bailouts for every $1 they paid in federal taxes, amounting to a total of $11.2 trillion, Oxfam said.

Charities including Oxfam and Christian Aid have dismissed European Commission proposals to crack down on tax dodging as “close to pointless”. Christian Aid said new rules would allow “dodgy business as usual”.

Under EC proposals, companies would have to report profits and pay taxes in the EU and certain so-far undisclosed tax havens.While campaigners have lobbied for country-by-country reporting of taxes and profits, the proposed versions is so limited that it would not do the job, charities say.

“Unless companies have to report on their activities in all the countries where they operate, they could continue to dodge tax on a massive scale, using the places still hidden from view,” said Toby Quantrill, Chrisian Aid’s tax justice expert.

An protest by Oxfam outside the European Commission headquarters in Brussels earlier this week (Getty)

Campaigners have long asked for country-by-country reporting of tax affairs but the latest EC proposals are only a limited version of the rule. A previous tax haven blacklist put together by the European Commission in 2015 was withdrawn after it failed to include key countries like Luxembourg.

The latest European Commission proposals come in the wake of a huge data leak from a law firm in Panama that provided evidence of the true scale of offshore banking by the world’s super rich, including many current and former world leaders. Oxfam described the exploitation of tax loopholes as an “integral component” of the profit-making strategies of many multinational corporations.

Tax avoidance comes in many forms. Companies have reported up to $2 trillion of profits as “permanently reinvested” abroad, meaning it is not accountable for tax in the US. Some of the companies The Independent spoke to said that they still pay high taxes in the countries where the subsidiaries are registered. This practice can help them reduce their US tax bill because companies receive a dollar-for-dollar credit for any amount of tax they pay to other countries.

Oxfam, Christian Aid and Action Aid have said that in order to create a fairer tax system, companies must publically report revenues and taxes, publically declare any subsidiaries in tax havens and publically reveal how much money they spend on lobbying politicians.

Is protecting the environment incompatible with social justice?

When Oxfam investigates the question of whether environment conflicts with development, we should take notice

A girl carrying water in Kibera slum, Nairobi. There is sometimes a clash between environmental policies and social justice. Photograph: Simon Maina/AFP/Getty Images

By George Monbiot

It is the stick with which the greens are beaten daily: if we spend money on protecting the environment, the poor will starve, or freeze to death, or will go without shoes and education. Most of those making this argument do so disingenuously: they support the conservative or libertarian politics that keep the poor in their place and ensure that the 1% harvest the lion's share of the world's resources.

Journalists writing for the corporate press, with views somewhere to the right of Vlad the Impaler and no prior record of concern for the poor, suddenly become their doughty champions when the interests of the proprietorial class are threatened. If tar sands cannot be extracted in Canada, they maintain, subsistence farmers in Africa will starve. If Tesco's profits are threatened, children will die of malaria. When it is done cleverly, promoting the interests of corporations and the ultra-rich under the guise of concern for the poor is an effective public relations strategy.

Even so, it is true that there is sometimes a clash between environmental policies and social justice, especially when the policies have been poorly designed, as I argued on this blog last month.
But while individual policies can be bad for the poor, is the protection of the environment inherently incompatible with social justice? This is the question addressed in a discussion paper published by Oxfam on Monday.

Oxfam, remember, exists to defend the world's poorest people and help them to escape from poverty. Unlike the rightwing bloggers, it is motivated by genuine concern for social justice. So when it investigates the question of whether concern for the environment conflicts with development, we should take notice. Kate Raworth, who wrote the report, has created an essential template for deciding whether economic activity will help or harm humanity and the biosphere.

She points out that in rough terms we already know how to identify the social justice line below which no one should fall, and the destruction line above which human impacts should not rise.
The social justice line is set by the eleven priorities listed by the governments preparing for this year's Rio summit. These are:

• food security
• adequate income
• clean water and good sanitation
• effective healthcare
• access to education
• decent work
• modern energy services
• resilience to shocks
• gender equality
• social equity
• a voice in democratic politics.

The destruction line is set by the nine planetary boundaries identified in Stockholm in 2009 by a group of earth system scientists. They identified the levels beyond which we endanger the earth's living systems of:

• climate change
• biodiversity loss
• nitrogen and phosphate use
• ozone depletion
• ocean acidification
• freshwater use
• changes in land use
• particles in the atmosphere
• chemical pollution.

We are already living above the line on the first three indicators, and close to it on several others.
The space between these two lines is the "safe and just space for humanity to thrive in". So what happens if everyone below the social justice line rises above it? Does that push us irrevocably over the destruction line? The answer, she shows, is no.

For example, providing enough food for the 13% of the world's people who suffer from hunger means raising world supplies by just 1%.

Providing electricity to the 19% of people who currently have none would raise global carbon emissions by just 1%.

Bringing everyone above the global absolute poverty line ($1.25 a day) would need just 0.2% of global income.

In other words, it is not the needs of the poor that threaten the biosphere, but the demands of the rich. Raworth points out that half the world's carbon emissions are produced by just 11% of its people, while, with grim symmetry, 50% of the world's people produce just 11% of its emissions. Animal feed used in the EU alone, which accounts for just 7% of the world's people, uses up 33% of the planet's sustainable nitrogen budget. "Excessive resource use by the world's richest 10% of consumers," she notes, "crowds out much-needed resource use by billions of other people."

The politically easy way to tackle poverty is to try to raise the living standards of the poor while doing nothing to curb the consumption of the rich. This is the strategy almost all governments follow. It is a formula for environmental disaster, which, in turn, spreads poverty and deprivation. As Oxfam's paper says, social justice is impossible without "far greater global equity in the use of natural resources, with the greatest reductions coming from the world's richest consumers".

This is not to suggest that all measures intended to protect the environment are socially just. Raworth identifies the evictions by biofuels companies and plantation firms harvesting carbon credits as examples of the pursuit of supposedly green policies which harm the poor. But before the sneering starts, remember that the fight against both these blights has been led by environmentalists, who recognised their destructive potential long before the libertarians now using them as evidence of the perfidy of the green movement.

But there are far more cases in which poverty has been exacerbated by the lack of environmental policies. The Oxfam paper points out that crossing any of the nine planetary boundaries can "severely undermine human development, first and foremost for women and men living in poverty." Climate change, for example, is already hammering the lives of some of the world's poorest people. You can see the consequences of crossing another planetary boundary in the report just published by the New Economics Foundation, which shows that overfishing has destroyed around 100,000 jobs.

Just as mistaken green policies can damage the poor, mistaken poverty relief policies can damage the environment. For example, where fertiliser subsidies encourage farmers to use more than they need, as they do in China, money supposed to relieve poverty serves only to pollute the water supply. Development which has no regard for whom or what it harms is not development. It is the opposite of progress, damaging the Earth's capacity to support us and the rest of its living systems.

But extreme poverty, just like extreme wealth, can also damage the environment. People without access to clean energy sources, for example, are often forced to use wood for cooking. This shortens their lives as they inhale the smoke, destroys forests and exacerbates global warming by producing black carbon.

With a few exceptions, none of which should be hard to remedy, delivering social justice and protecting the environment are not only compatible: they are each indispensable to the other. Only through social justice, which must include the redistribution of the world's ridiculously concentrated wealth, can the environment and the lives of the world's poorest be defended.

Those who consume far more resources than they require destroy the life chances of those whose survival depends upon consuming more. As Gandhi said, the Earth provides enough to satisfy everyone's need but not everyone's greed.