Tax Evasion Poses Significant Threat to Global Poverty Reduction
Global tax evasion undermines poverty reduction efforts, costing nations billions in lost revenue.
Key Points
- • Tax evasion costs the world $492 billion annually.
- • Low- and middle-income countries lose about $200 billion in tax revenues each year.
- • Sweden's position on a global tax convention is seen as contradictory.
- • There are proposals for solidarity taxes to finance climate action.
A recent report by the Tax Justice Network highlights the alarming impact of global tax evasion on poverty reduction efforts, revealing that countries around the world lose an estimated $492 billion annually to tax avoidance. This figure starkly outweighs the global aid budget, which stood at $212 billion in 2023. Low- and middle-income nations bear the brunt of this loss, facing an annual decrease of approximately $200 billion in tax revenues, hindering their ability to fund essential services such as healthcare and education.
Gunnel Axelsson Nycander from Act Svenska kyrkan asserts, "Without sufficient tax revenue, poverty cannot be reduced." The need for a global tax convention has garnered widespread support, including from the African group at the UN, aimed at countering tax evasion. Thus far, discussions around this convention are slated to conclude by 2027.
Interestingly, Sweden’s position remains complex; while the Swedish government has abstained in multiple votes on this international initiative, citing a belief in national sovereignty over tax matters, Tove Maria Ryding from Eurodad argues that Sweden and the EU's stance is contradictory. She insists that significant collaboration is essential, stating, "Progressive countries should support the tax convention and not merely depend on private investments, which have proven insufficient."
Additionally, proposals have emerged for solidarity taxes on high-emission sectors to fund climate initiatives, underscoring the interconnectedness of tax policy and global challenges beyond poverty reduction.