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A report showing how a “war on taxation” by corporations in Africa has seen the effective corporate tax rate fall by roughly a third in recent decades.
This is according to the latest report launched by Oxfam.
The report titled “Inequality Inc.” published on Monday in the Swiss resort town of Davos, showed that an estimated US$200 billion was lost annually due to corporate tax avoidance, with Global South countries tending to suffer the impacts disproportionately.
The report showed how a “war on taxation” by corporations had seen the effective corporate tax rate fall by roughly a third in recent decades, while corporations had relentlessly privatised the public sector and segregated services such as education and water.
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“Corporations and their wealthy owners also drive inequality by undertaking a sustained and highly effective war on taxation. The statutory corporate income tax rate has more than halved in OECD countries since 1980 aggressive tax planning, abuse of tax havens and incentives result in tax rates that are much lower and often closer to zero.
“This drives inequality in a number of ways. Corporate taxes are disproportionately borne by the richest, thus the collapse in corporate taxes in recent decades has essentially provided another tax cut for the wealthy,” according to the report
According to the report, this had also deprived governments around the world, but especially in the Global South, of trillions of United States dollars in revenue that could be used to reduce inequality and end poverty.
African countries were reportedly nearly twice as reliant as OECD countries on revenue from corporate income tax to fund their public spending.
Commenting on the report, Oxfam in Africa Director, Fati N’zi-Hassane, said governments must step up and ensure corporations stop squeezing workers, dodging tax, and plundering our planet in their quest for massive profits.
N’zi-Hassane warned that if left unchecked, these corporations would continue to widen the inequality gap.
“African governments do not need magic to create a more equal Africa. They just need to do their job. They must shut down the open bar of resource plundering, break up monopolies, tax the super-rich and use these resources to invest in inequality-busting policies.
“Our rigged economies are benefiting the super-rich while governments are struggling to provide crucial public services like healthcare and education to Africans across the continent,” she said.
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