Conservationists should take note of tax dodging and its potential links to biodiversity loss, argues Jonny Hanson, although research is needed to clarify the relationships.
Santa Claus is in trouble. A recent cover of the satirical British magazine, Private Eye saw him being heckled for living offshore and not paying tax in the UK. This irreverent take on Father Christmas may have been in jest, but it underscores the magnitude of the issue: tax dodging is highly political. Especially since the financial crisis of 2007-08, and from the grassroots to the great and the good, it has rarely been out of the public spotlight.
That’s because tax dodging is big business. Christian Aid, an international development NGO, estimates that $160 billion of tax is lost every year by developing countries due to tax dodging by multinational companies (MNCs) alone. This is 50% more than the entire global aid budget.
Tax dodging is an umbrella term that encapsulates both legal tax avoidance and illegal tax evasion. In brief, it occurs through the artificial inflation of corporate profits in tax havens to minimise tax payments elsewhere, often through charging for opaque services such as insurance, finance, management or brand rights. A banana, for example, between being harvested in Latin America and sold in the UK, may travel through up to six tax havens on paper: Bermuda, Ireland, the Isle of Man, Jersey, Luxembourg, the Cayman Islands, and the like.
But is tax dodging a conservation issue? Are there links between it and biodiversity loss? This blog aims to answer some of these questions, looking particularly at the role of MNCs within developing countries. Continue reading