Ei-iE

Research: EI challenges tax evasion to secure quality public services

published 29 June 2011 updated 4 July 2011

EI is undertaking a new project to shed light on the payment of fair and reasonable taxation by global corporations, and to expose the ways in which existing tax regimes are manipulated by corporations with global reach.

The paper is set in the broader context of the role of taxation in society, as a source of revenue for quality public services, and as an instrument of distributive justice and equity.

Through the report, education unions and citizens, as well as political decision-makers develop their understanding of how resources for quality public services, such as public education, can be found without increasing the burden of taxation on citizens or small or medium enterprises (SMEs), but by applying the existing rules and putting in place principles for mandatory adherence by global corporations of their fiscal responsibilities.

The study is complementary to the well-researched public campaign for a tax on international financial transactions tax (the FTT), and puts the spotlight on an area which has received less attention – the loss of tax revenues due to economic globalisation. The paper is meant in the broader context of the role of taxation in society, as a source of revenue for quality public services, and as an instrument of distributive justice and equity.

Preliminary work by the ICFTU in 2006 showed that multi-national companies use their global reach to avoid their responsibility to contribute through fair and responsible taxation to national and community social needs. Techniques for ‘minimisation’ of corporate tax include the use of off-shore tax havens, setting up competition between localities and countries for tax advantages (‘arbitrage’), and the little-known technique of ‘transfer pricing’ – a phenomena that will be particularly investigated through the study.

The project is being conducted under the auspices of the Council of Global Unions, within the framework of the broader Quality Public Services Campaign ( www.qpsactionnow.org).

EI has volunteered to take the lead, and has raised funds through the EI Research Institute (Hans Boeckler Stiftung, Germany; NEA, USA, and UNIO, Norway) and will be responsible for co-ordinating the study. Preliminary findings will be discussed at the forthcoming sixth EI World Congress in Cape Town, and the study is set to be completed by the end of September 2011. It will then be published as a Global Unions Report by December 2011.