From the TUC

Tax avoidance by multinationals: teacher trade unions demand an end

29 Nov 2011, by in Economics, International, Public services

Yesterday the global teacher union federation, Education International, exposed the massive revenues lost to governments through corporate tax avoidance and the impact of this on education and other vital public services which are at risk from government expenditure cuts. A new report, launched at Congress House, shows how powerful multinational companies use their global reach to avoid meeting their fair fiscal obligations, through strategies like exploiting legal loopholes and offshore tax havens. Global Corporate Taxation and Resources for Quality Public Services highlights the extraordinary statistic that an estimated 60% of all global trade is actually routed through tax havens.

The study was released this week to suport EI’s UK affiliates (ATL, EIS, NASUWT, NUT and UCU) who are striking against Government plans to slash teacher and other public sector pensions, with some teachers losing more than £50,000 over 20 years from the value of their pension. It argues that if the UK government took firm action on tax evasion, the money released would be more than what is going to be cut from public sector pensions.

The study underlines the shocking extent of tax avoidance by multinational companies, totalling trillions of US dollars annually. It follows on from a previous study published in March 2010 by Global Financial Integrity, a research and advocacy organisation promoting transparency in the international financial system, estimating that current total deposits just by non-residents in offshore and secrecy jurisdictions were close to US$10 trillion.

EI President, Australian teacher union leader Susan Hopgood, said:

“Closing loopholes in international tax legislation will require changing attitudes, and calls for strong political will. The widespread acceptance of tax avoidance as a legitimate goal of large corporations must change. Unless this appalling and unjustified tax evasion is stopped, quality public education and other services will continue to be put at risk by cuts in public spending.”

Meanwhile ITUC General Secretary Sharan Burrow, another ex-teacher, said:

“Hundreds of billions of dollars are lost each year as corporations find new and intricate ways to avoid paying their taxes, and governments compete to attract multinational investment by cutting company tax ever lower.  Governments are effectively cheating their own people of corporate tax revenues which could be put to good use in ensuring quality public services.  They need to focus on ensuring companies pay their fair share, instead of cutting back government services, reducing wages and reducing peoples’ rights at work through misguided fiscal austerity measures.  This report will help bring the scandal of corporate tax avoidance into the public spotlight.”

The report was commissioned by the Education International Research Institute on behalf of the Council of Global Unions, which  brings together the Global Union Federations with the ITUC and the Trade Union Advisory Committee to the OECD.