The new scandal about the “Paradise Papers” reminds us how harmful tax fraud can be for our economies. Oxfam Belgium decided to raise concern about this scourge through a shock video.

The phrase “Paradise Papers” refers to a leak of documents coming mostly from the international firm Appleby. Thanks to the inquiry conducted by the International Consortium of Investigative Journalists, these data reveal how enormous amounts of money slip from regulatory authorities and states’ taxation by means of complex methods of tax optimisation. Far from the exception, they show that tax-heavens, are embedded in the system.

For large multinational, it is a way to optimise costs as if taxes were an expense on which you can save. These societies use tax-heavens to transfer their benefits and their intangible assets without employing the needed staff locally. And of course, they hold back from giving the list of their affiliates…

The international authorities and the states go into action against those abuses. In 2015, the G20’s members declared: we are committed to take actions to reach a modern and fair international tax system”. A BEPS[1] plan to fight excessive tax optimization in very big firms has been set up. It is made of about 15 recommendations approved by the G20 in 2015 which focus on transparency, reinforcement of the rules, and coherence of the international activities with the home country’s laws. The European tax legislation has been strengthened for listed and non-listed companies from the extractive sector (oil, gas, forest) which are compelled to publish tax payments.

Nevertheless, a prejudice remains anchored and slow the politicians: it is the idea that strengthening tax rules could hurt the economy. However, the money lost is considerable. According to the calculations by the economist Gabriel Zucman, the European Union is deprived of 60 billion euros of tax revenues each year because of multinational companies’ tax optimisation, this loss contributes to the debt level of the states and distorts competition.

The 2013 report of the intergovernmental organisation CCFD-Terre Solidaire explains that the first victims of this tax evasion  are the developing countries which would be deprived of 250 billion euros of tax revenues each year, what is about 6 times the necessary funding for an efficient fight against hunger. The lost billions could also have enabled billions of men and women to get medical care. This is the idea expressed by Oxfam-Belgium in its shock video featuring a hold-up in a hospital. The violence of the pictures raises awareness on the necessity to react to this ordinary robbery.

[1] Base Erosion and Profit Shifting