Tax justice and the global fiddle

New Internationalist (NI) magazine has published its October edition, which has Tax Justice as its central theme. Needless to say we're thrilled, since this is yet another indication that the tax justice theme has entered the mainstream.

In their keynote article, Tax justice and the global fiddle, NI touches on a wide range of issues, and they get straight to the heart of the matter. Referring to the role of accounting firms - and the International Accounting Standards Board - in rotting tax systems from within, they say:

"This cabal, and the shift to regressive taxation, had the effect of rotting liberal democracies from within. An ancient injunction - 'no taxation without representation' - was casually turned on its head. The less tax you paid, relative to your wealth, the more political clout you were now likely to be accorded."

In this ugly new world of captive political parties and governments,

"the state became an agent of the market, simply policing the gross injustices built into the unrestrained accumulation of private wealth and political power."

So far, so true, and they go on to address how right-wing libertarian theories were dressed up in populist language to distract public opinion away from the underlying agenda of freeing rich people and capital from paying tax:

"The rhetoric that accompanied the worldwide shift towards regressive taxation spoke of small government and more personal liberty. In the event, governments got more authoritarian but no smaller, while personal liberties shrivelled. In rich countries, tax revenues as a proportion of national income remained much the same as before, though they were now collected more indirectly."

Elsewhere, in the poorer countries of what NI calls the Majority World, this shift towards indirect taxation has had a doubly pernicious impact on both inequality and state accountability. As they rightly note, and we have discussed this previously -

"Something resembling liberal democracy might indeed be more recognisable worldwide if governments raised their revenues from their own citizens - rather than from, say, development aid - and were perhaps more accountable as a result."

Yes indeed, and they follow on:

"But what, precisely, is the justification for imposing regressive taxation on the people of the Majority World, most of whom live in countries where the maldistribution of wealth is already grotesque?"

In the following article, "Can pay . . . won't pay" (you will have to get a subscription to read it) TJN's director, John Christensen looks at the role of secrecy jurisdictions in promoting tax injustices and financial instability, posing the 64,000 dollar question:

"why has the tax haven racket been allowed to flourish this long?"

The answer, as we already know, lies with the post-colonial policies of countries like Britain:

"By encouraging its overseas territories and Crown dependencies to become tax havens, the British government set in motion a global financial octopus with the City as its head, heart and mouth, and the satellite tax havens as its tentacles, scooping up vast sums of money from around the world and feeding it into London."

David Hillman from our partners at Stamp Out Poverty devotes his article - Tax the richest: why are we waiting? to summarising recent developments in the area of innovative finance mechanisms to tackle poverty, including, of course, the Currency Transaction Development Levy (CTDL) and the French-led UNITAID programme for funding drug purchases for HIV/Aids, TB and malaria treatments. The UNITAID programme, which is largely funded from an aviation levy on air passenger tickets, is the first global fund to be financed from what to all intents and purposes can be described as an international development tax.

In the fourth of feature articles on tax justice, Nicola Liebert from TJN-Deutschland (and a member of our global board) explores Why ecotaxes may not be the answer.

"Green taxes were a brilliant idea when they were first conceived, " she says, "but for a solution of global problems, which requires careful balancing between environmental necessities and the economic needs of the developing world, we may have to look elsewhere."

As always with New Internationalist, the serious editorial content is accompanied by lively sections giving A short history of Taxation, and a further history of tax revolts - Rebels with a cause - exploring popular rebellions against tax injustice ranging from Mahatma Gandhi's famous Salt March in 1930 through to the Black February uprising in Bolivia in 2003 when workers revolted against tax increases required by the International Monetary Fund.

With its lively and imaginative graphics, this edition of New Internationalist is a great starter pack for people who want to learn about tax justice. Buy one and show your friends.