Tax Dodging by Super-Rich, Big Corporations Costs Nations Half a Trillion Per Year: Study
Original article by Jake Johnson republished from Common Dreams under Creative Commons (CC BY-NC-ND 3.0).
“The U.K. and the U.S. are both among the biggest enablers and the biggest losers of this lose-lose tax system,” said the chief executive of the Tax Justice Network.
A study published Tuesday estimates that tax dodging enabled by the United States, the United Kingdom, and other wealthy nations is costing countries around the world nearly half a trillion dollars in revenue each year, underscoring the urgent need for global reforms to prevent rich individuals and large corporations from shirking their obligations.
The new study, conducted by the Tax Justice Network (TJN), finds that “the combined costs of cross-border tax abuse by multinational companies and by individuals with undeclared assets offshore stands at an estimated $492 billion.” Of that total in lost revenue, corporate tax dodging is responsible for more than $347 billion, according to TJN’s calculations.
“For people everywhere, the losses translate into foregone public services, and weakened states at greater risk of falling prey to political extremism,” the study reads. “And in the same way, there is scope for all to benefit from moving tax rule-setting out of the OECD and into a globally inclusive and fully transparent process at the United Nations.”
The analysis estimates that just eight countries—the U.S., Canada, the U.K., Japan, Israel, South Korea, Australia, and New Zealand—are enabling large-scale tax avoidance by opposing popular global reform efforts. Late last year, those same eight countries were the lonely opponents of the United Nations General Assembly’s vote to set in motion the process of establishing a U.N. tax convention.
According to the new TJN study, those eight countries are responsible for roughly half of the $492 billion lost per year globally to tax avoidance by the rich and large multinational corporations, despite being home to just 8% of the world’s population.
“The hurtful eight voted for a world where we all keep losing half a trillion a year to tax-cheating multinational corporations and the super-rich,” Alex Cobham, chief executive of the Tax Justice Network, said in a statement Tuesday. “The U.K. and the U.S. are both among the biggest enablers and the biggest losers of this lose-lose tax system, and their people consistently demand an end to tax abuse, so it’s absurd that the U.S. and U.K. are seeking to preserve it.”
“It’s perhaps harder to understand why the other handful of blockers, like Australia, Canada, and Japan, who don’t play anything like such a damaging role, would be willing to go along with this,” Cobham added.
Sorry, this content could not be embedded.
X
TJN released its study as G20 nations—a group that includes most of the “hurtful eight”—issued a communiqué pledging to “engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed.” Brazil, which hosted the G20 summit, led the push for language calling for taxation of the global super-rich.
The document drew praise from advocacy groups including the Fight Inequality Alliance, which stressed the need to “transform the rhetoric on taxing the rich into global reality.”
The communiqué was released amid concerns that the election of far-right billionaire Donald Trump in the U.S. could derail progress toward a global solution to pervasive and costly tax avoidance.
The new TJN study cites Trump’s pledge to cut the statutory U.S. corporate tax rate from 21% to 15% and warns such a move would accelerate the global “race to the bottom” on corporate taxation.
“People in countries around the world are calling in large majorities on their governments to tax multinational corporations properly,” Liz Nelson, TJN’s director of advocacy and research, said Tuesday. “But governments continue to exercise a policy of appeasement on corporate tax.”
“We now have data from these governments showing that when they asked multinational corporations to pay less tax, the corporations cheated even more,” Nelson added. “It’s time governments found the spines their people deserve from their leaders.”
Original article by Jake Johnson republished from Common Dreams under Creative Commons (CC BY-NC-ND 3.0).
10 reasons why US president-elect Donald Trump can’t derail global climate action
Wesley Morgan, UNSW Sydney and Ben Newell, UNSW Sydney
If you care about saving Earth from catastrophe, you might be feeling a little down about the re-election of Donald Trump as United States president. Undeniably, his return to the White House is a real setback for climate action.
Trump is a climate change denier who has promised to increase fossil fuel production and withdraw the US from the Paris climate deal, among other worrying pledges.
But beyond Trump and his circle, there remains deep concern about climate change, especially among younger people. Support for climate policy remains high in the US and around the world. And studies based on data from 60,000 people in more than 60 countries suggest individuals’ concern about climate change is widely underestimated.
So now is a good time to remember that efforts to tackle the climate crisis – both in Australia and globally – are much bigger than one man. Here are ten reasons to remain hopeful.
1. The global clean energy transition can’t be halted
The global shift to clean energy is accelerating, and Trump can’t stop it. Investment in clean energy has overtaken fossil fuels, and will be nearly double investment in coal, oil and gas in 2024. This is a historic mega-trend and will continue with or without American leadership.
2. Clean energy momentum is likely to continue in the US
Much of the Biden-era spending on clean energy industries went to Republican states and Congressional districts. New factories for batteries and electric vehicles will still go ahead under the Trump administration. After all, entrepreneur Elon Musk – who is expected to join the Trump administration – makes electric vehicles.
Some of Trump’s financial backers are receiving subsidies for clean energy manufacturing and 18 Republican Congress members have gone on record to oppose cuts to clean energy tax credits.
3. The US still wants to beat China
There is bipartisan concern in Washington about the US losing a technological edge to Beijing. China currently dominates global production of electric vehicles, batteries, wind turbines and solar panels. So internal pressure in the US to counter China’s manufacturing might will continue.
4. The federal government is not everything in the US
When Trump was last in power, he withdrew the US from some climate commitments, such as the Paris Agreement. But many state and local governments powered ahead with climate policy, and that will happen this time around, too. For example, California – the world’s fifth largest economy – plans to eliminate its greenhouse gas footprint by 2045. Even Texas, a Republican heartland, is leading a shift toward wind and solar power.
5. The US climate movement will be more energised than ever
During Trump’s first presidency, the US climate movement developed policy proposals for a “Green New Deal”. Many of these proposals were later implemented by the Biden administration. Initial reactions to Trump’s re-election suggest we can expect similar policy advocacy this time around.
6. Global climate cooperation is bigger than Trump
If Trump makes good on his promise to leave the Paris Agreement (again), he will only be leaving the room where the world’s future is being shaped. The US has walked away from global climate agreements before – for example, refusing to join the Kyoto Protocol in 2001. But other nations rallied for global action, and will do so again.
7. The rules-based global order will remain
When a nation walks away from rules that have been agreed after decades of negotiation, responsible countries must work together to bolster global cooperation. This applies to trade and security – and climate is no different.
As our Foreign Minister Penny Wong recently explained, Australia, as a middle power on the world stage, wants:
a world where disputes are resolved by engagement, negotiation and by reference to rules [and] norms […] We don’t want a world in which disputes are resolved by power alone.
8. Australian diplomacy matters
Australia is seeking to co-host the United Nations climate talks with Pacific island countries in 2026, and is emerging as the favourite. Hosting the conference, known as COP31, would be a chance for Australia to help broker a new era of international climate action, even if the US opts out under Trump.
Hosting the talks would also help cement Australia’s place in the Pacific and assist our Pacific neighbours to deal with the climate threat.
9. Australia’s clean energy shift is accelerating
About 40% of Australia’s main national electricity grid is powered by renewables and this is set to rise to 80% by 2030. Some states are surging ahead – for example, South Australia is aiming for 100% renewables by 2027.
Australians love clean energy at home, too. One in three households have rooftop solar installed, making us a world-leader in the technology’s uptake. Trump’s occupation of the Oval Office cannot stop this momentum.
10. Trump cannot change the science of climate change
The science is clear – burning coal, oil and gas fuels climate change and increases the risk of disasters that are harming communities right now. In Australia, we need look no further than the Black Summer bushfires in 2019-20 and unprecedented Lismore floods in 2022.
And the damage is happening across the globe. In October, twin hurricanes in the US – made stronger by the warming ocean – left a damage bill of more than US$100 billion. And hundreds of people died when a year’s worth of rain fell in one day in Spain last month.
On gloomy days – like, say, the election of a climate denier to the White House – it might feel humanity won’t rise to Earth’s biggest existential challenge. But there are many reasons for hope. The vast majority of us support policies to tackle climate change, and in many cases, the momentum is virtually unstoppable.
Wesley Morgan, Research Associate, Institute for Climate Risk and Response, UNSW Sydney and Ben Newell, Professor of Cognitive Psychology and Director of the UNSW Institute for Climate Risk and Response, UNSW Sydney
This article is republished from The Conversation under a Creative Commons license. Read the original article.
For decades, governments have subsidised fossil fuels. But why?
Bernard Njindan Iyke, La Trobe University
Even now, decades after we first began trying to avert the worst of global warming, more than 80% of the world’s total energy comes from fossil fuels.
You might think this would make fossil fuel production extremely profitable. But it’s not always the case. Much of the most accessible oil has already been extracted and burned. Many countries want to shore up domestic sources of fossil fuels to boost energy security. Energy price fluctuations and competition from new energy sources such as solar, wind and fossil gas have made it harder for some fossil fuel companies to make money, especially in coal.
This is where fossil fuel subsidies come in. Australia gave A$14.5 billion in subsidies to major fossil fuel producers and consumers in 2023–24 alone.
You might have wondered – why would some of the largest companies on Earth need subsidies? Here’s why.
Private companies, public money
Globally, private companies dominate fossil fuel production, though fossil fuel-rich nations often have state-owned companies, such as Saudi Arabia’s Aramco and Russia’s Rosneft.
Why would governments give fossil fuel companies money? Many reasons. But the most important is that wealthy countries have historically needed huge volumes of fossil fuels for manufacturing, transport and power. Many countries have some sources of fossil fuels inside their borders, but only a few are self-sufficient. This has enabled fossil fuel giants such as Saudi Arabia to become wealthy beyond belief.
Many governments have used subsidies to boost their energy security and encourage local producers to seek out new sources of coal, gas and oil. These subsidies can make all the difference in making fossil fuel companies competitive internationally. For instance, Canada spent billions on subsidies to boost its oil sands and fracking projects.
Subsidies were essential in the United States’ fracking revolution. Novel approaches to extracting fossil gas and oil – boosted by major tax incentives – turned the US from a major importer of oil and gas into a net exporter by 2019.
You can see why the US did this. At a stroke, it went from being dependent on energy provided by foreign nations to being independent.
Once subsidies are in place, they become very hard to remove. Indonesia’s lavish fuel subsidies now account for 2% of the nation’s GDP. When the national government tried to walk these back, there were riots.
And there’s another reason, too. Fossil fuels are still playing an important role in boosting the economy in most nations. Subsidising them has long been seen as a way to maintain economic growth and stability.
Globally, these subsidies are estimated at a staggering $10.5 trillion each year.
This figure has grown sharply in recent years, after Russia’s invasion of Ukraine. As European nations tried to wean themselves off Russia’s gas, energy prices surged worldwide. In response, some countries introduced new subsidies to support businesses and consumers.
The top-line figure of $10.5 trillion includes two types of subsidy – explicit (meaning real dollars change hands) and implicit (for example, governments building roads and railways to encourage crude oil transport).
Explicit subsidies
Explicit fossil fuel subsidies are direct financial incentives from governments to fossil fuel producers and consumers. These incentives come in different forms, such as tax breaks, direct payments, grants and price controls. All of them aim to reduce the financial burden associated with fossil fuel production and use.
In Australia, explicit subsidies include fuel tax credits and exploration tax reductions. Fossil fuel companies can get subsidies to offset the losses they make during the years it takes to find and begin extracting new fossil fuels.
In the US, oil and gas companies benefit from the oil depletion allowance, which permits them to deduct a percentage of their gross income from oil and gas sales as an expense. They can also claim tax deductions for intangible drilling costs, such as the wages of workers and material needed to find new sources of oil and gas.
China, too, uses direct subsidies, discounted land-use fees, and preferential loans as explicit subsidies to boost coal production and consumption. The national government also supports fossil fuel consumption through direct payments to consumers.
Implicit subsidies
Implicit subsidies are often described as “imaginary”. That doesn’t mean they don’t exist, just that they’re not a direct transfer to directly paid to fossil fuel producers.
For instance, the cost of burning fossil fuels is borne by the global community and the natural world, in the form of climate change, damage to human health and other harms. Most fossil fuel companies don’t have to pay a cent for the pollution their products cause – so in effect, they are being granted an indirect subsidy.
Implicit incentives also include government investment in facilities such as transport networks, pipelines, oil refineries and port infrastructure, which will accelerate fossil fuel production and delivery. Think of the Middle Arm development in Darwin, funded by both the federal and territory government.
Why are these subsidies still being paid?
As the world grapples with a worsening climate crisis, fossil fuel subsidies are under great scrutiny.
It’s politically difficult to withdraw subsidies once given. This is why governments around the world have instead begun to give subsidies and tax incentives to green energy developers, including the enormous $500 billion Inflation Reduction Act in the US, the European Union’s Green Deal, and China’s massive subsidies of green technologies such as electric vehicles and solar panels.
The goal here is to make renewable energy and electrified transport steadily more affordable and competitive – just as fossil fuel subsidies did for oil, gas and coal.
Bernard Njindan Iyke, Lecturer in Finance, La Trobe University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
Dozens of Climate Activists Arrested at Citibank Headquarters in New York City During Earth Week
Campaigners pressuring Citibank say they see the bank as potentially movable on its funding of fossil fuels, citing the company’s commitments to sustainability.
NEW YORK—Climate demonstrators blocked entrances to Citibank’s headquarters in Manhattan at the start of the workday on Wednesday and Thursday, part of a series of Earth Week actions pressuring the bank to end its financing of fossil fuels. On both mornings, it took the New York Police Department less than 10 minutes to start making arrests.
Climate activists, citing Citibank as the second largest financier of fossil fuels in the world, are engaged in a multi-year campaign to pressure the bank to stop financing oil, gas and coal projects. The week’s protests follow a mock environmental justice hearing at a New York church on Monday, where advocates spoke about the health harms and human rights violations of Citibank-financed fossil fuel projects in Peru, Canada and domestically. The New York demonstration was timed alongside actions in Seoul, South Korea, Melbourne, Australia, Jakarta, Indonesia, Belfast, Northern Ireland, and Dallas that also targeted Citibank’s financing of coal, oil, natural gas and military projects.
At about 8:15 Wednesday morning, activists holding four large white banners that together read “Stop Funding Fossil Fuels” blocked the main entrance to Citibank’s headquarters while smaller groups of demonstrators stood outside other entrances to the building. Police began taking protesters into custody at 8:30 and arrested approximately 33 activists for disorderly conduct at Wednesday’s protest, according to activists and the office of NYPD’s deputy commissioner of public information.
…
Campaigners have said that, since 2016, Citibank has provided $332 billion in fossil fuel financing, and calculate that the bank has given $1.85 billion in financing to oil and gas operations in the Amazon since 2009 and $1.78 billion in financing to ConocoPhillips, the company behind the contentious Willow Project.
…