As global capitalism continues to lurch from one crisis to the next, massive levels of tax abuse and avoidance are robbing governments of the resources they need.
Nowhere is this systemic malaise more manifest than in the extractives industry, which pillages the resources of developing countries while offering them a pittance in return. Last year the 40 largest mining companies raked in US $683 billion, mostly from the Global South, through the extraction of oil, gas and minerals. But rather than paying their fair share of taxation to the countries where they operate, most extractive companies channel their revenue through a complex network of corporate tax havens and financial secrecy jurisdictions to avoid contributing. Meanwhile, local elites in host countries collude in providing tax incentives and low corporate tax rates to ensure these companies pay the absolute minimum to local economies.
The Global Alliance for Tax Justice is a growing movement of civil society organisations and activists, including trade unions, united in campaigning for greater transparency, democratic oversight and redistribution of wealth in national and global tax systems.
Cross-posted from Action Day Website
Controlled by only a handful of huge conglomerates, the extractive industry is one of the highest revenue-earning industries in the world. In 2018, the top 40 mining companies raked in USD683 billions of revenues from extracting oil, gas, and minerals that are mostly found in resource-rich developing countries in the Global South. The same top 40 mining companies represent over half of the global thermal coal trade and almost half of the global production of key commodities such as iron ore, copper, manganese, cobalt and other metals.
In stark contrast to the billions of profits made by the extractive companies from mining, the host countries get a pittance in exchange. Aside from losing their natural resources from extraction, host countries also lose billions of dollars from abusive tax practices by mining multinational corporations. With their immense wealth, extractive companies can easily team up with giant legal and accounting firms to help them avoid paying their fair share of taxes and shift their profits in tax havens and financial secrecy jurisdictions.
Meanwhile, some countries recognize that the extractive sector can be a major destination of foreign direct investments. To attract investments from the industry, generous tax incentives, such as income tax holidays and low corporate income tax rates, are being given away by host countries. This is further facilitated by colluding local elites who stand to benefit from mining and extractive deals. Huge revenues are lost from tax incentives, inequitable rent –sharing and corruption while natural resources are being plundered, causing irreversible damage to the environment and harmful impacts on the communities especially on the rural women.
The billion-dollar extractive industry is notorious for human rights abuses and environmental violations. It has been linked to the killings of environmental activists as well as to various business-related human rights complaints globally. Extractive projects have exacerbated climate change, destroyed the livelihood of communities, and displaced and exploited people. Indeed, the extractive industry is a blatant embodiment of different forms of injustices – economic, social, and environmental.
Each dimension of injustice has its own specific aspects and challenges. The solutions proposed to solve one aspect may contribute to mitigate problems of the other aspects. By unmasking the extractive companies’ grand theft of taxes and demanding for tax justice in the extractive industry, the Global Alliance for Tax Justice (GATJ) aims to contribute to the struggles for democratization and redistribution of wealth and to strengthen the existing fights for economic, social and environmental justice.
What are our key demands?
We urge social movements, rights and environmental organisations, citizens’ groups, NGOs, and activists to campaign for #TaxJustice in the Extractive industry.
The GATJ Campaign on Tax Justice in the Extractive Industry will push for the following demands. Depending on the national and regional contexts as well as organizational priorities and capacities, GATJ members and allies may carry all the demands or may strategically choose the demands that they would like to focus on.
- Stop the plunder and exploitation of natural and human resources and move away from reliance on extractivist economies characterized by over-production and over-consumption by the wealthy.
- Ensure a comprehensive and effective tax regime for extractive industries, including through resource or export taxes on the export of raw materials from extractive activities, taxation of services related to extractive industries and progressive environmental taxes. Apply effective anti-abuse measures to prevent corporate tax avoidance and other types of illicit financial flows.
- Levy just, progressive and adequate tax rates on mining and extractive activities and ensure that this revenue contributes to quality public services for all, with special priority to the needs of mining-affected communities and vulnerable groups.
- Scrap wasteful tax incentives granted to extractive industries.
- End the impunity of corporations in mining and other extractives industries in their tax abusive practices, including illicit financial flows, and hold them to account for compliance with environmental standards, human rights and fiscal policies. Ensure the financial transparency of extractive corporations, and publish all contracts and any agreements entered into by governments for the exploitation of natural resources, including Production Sharing Agreements.
- Ensure transparency and accountability at different levels of government and parliamentary policy-making and regulation over the extractives industry. Implement strict anti-corruption policies and punish government officials who are involved in corrupt practices in all phases of mining and extractivist activities, from exploration and licensing to production, use and final point of sale. Hold governments, parliaments, sub-national state bodies and their agencies to account for the tax abuses of mining companies and the complicity of local elites.
- Institute and enforce tighter social, financial and environmental regulations and sanctions over the extractives sector. Close down harmful and abusive mining projects/companies.
- Reject or cancel provisions for fiscal stability, investor state dispute settlement, grandfathering and other lock-in clauses in treaties, agreements and contracts with extractive industries, which constrain the decision-making processes of governments, legislative and parliamentary bodies over fiscal and regulatory concerns.
- Uphold the rights of communities and women affected by mining and other extractivist activities, including their right to protect their communities.
- Protect the rights of the artisanal miners.