Lawyers can support tax justice
Corporations argue that their behaviour is legal. They are backed up by their lawyers, who say that their mandate is to reduce their client’s tax liability. “Tax avoidance is something that is advocated and taught during legal training,” one lawyer recalled. But growing public anger in rich and poor countries at revenues lost through tax dodging by multinationals and individuals is shifting the goalposts. A recent report by Corporate Citizenship found that the distinction between tax evasion (which is illegal) and tax avoidance (which is lawful) has dissolved in the eyes of governments, NGOs and citizens.
In order to boost revenue from multinationals operating in developing countries, the law could side-step the distinctions between tax avoidance and tax evasion and focus on ‘tax abuse’This approach is being taken by an International Bar Association Human Rights Institute task force, looking into the relationship between illicit financial flows, poverty and human rights. It is asking how a more effective and equitable tax system can help eradicate poverty and what new approaches can be taken, to generate revenue for development and promote good tax governance. It is also investigating whether tax abuses are an infringement or violation of human rights under international law.