Tax! It’s a $492 billion Tax dodging globally

British advocacy group The Tax Justice Network’s ‘State of Tax Justice 2024’ of report, reveals that a staggering $492 bn is lost annually due to global tax- dodging.

This is a tale of two kinds of tax-avoiders: one, corporate; the other, personal. Two-thirds of the total $347.6 bn comes from MNCs playing an elaborate game of offshore hopscotch to underpay taxes. The remaining third, $144.8 bn, stems from HNIs hiding their treasure chests in tax havens.

This grand evasion is leaded eight countries, by the ‘Elite Eight’, are at the forefront: Australia, Canada, Israel, Japan, New Zealand, South Korea, Britain and the US. Together, these economic heavyweights are responsible for nearly half of global tax abuse losses.

Ironically, the Elite Eight not only enable tax abuse but also suffer from it, losing $177 bn annually to tax-dodging.

Critics argue these countries prioritise corporate interests over equitable global reform. Why are the biggest enablers also the biggest losers? Why does tax abuse persist despite global outrage?

The answers are straightforward. MNCs shift profits offshore because they can. Tax havens offer sweetheart deals, and loopholes remain conveniently unaddressed. HNIs stash their cash abroad, while governments are complicit, overwhelmed or apathetic.

The report also highlights the plight of countries like India, where effects of global tax abuse are particularly devastating. India loses over $10.3 bn (about 75k cr) annually to global tax abuse. This represents 0.41% of its $3   tn GDP, with $10 bn lost to corporate tax abuse and $200 mn to individual tax evasion.

India is particularly vulnerable to illicit financial flows through outward FDI, with Mauritius, Singapore and the Netherlands being key contributors to this vulnerability.

Tax abuse is more than a numbers game. A chance to confront a system that prioritises profits over people. It’s also a justice issue that strikes at the heart of fairness, equality and shared responsibility to fund a better future.

P.K. Sidhu