We might notlike the idea
of paying taxes, but without it,
democracies will struggle to function, and will be unable to provide public services. This affects both rich and poor nations, alike.
Individuals and companies all have to pay
taxes. But some of the world’s wealthiest
individuals and multinational companies,
able to afford ingenious lawyers and
accountants, have figured out ways to avoid
paying enormous amounts of taxes. While we
can get into serious trouble for evading
payment of taxes, even facing jail in some
countries, some companies seem to be able to
get away with it. In addition, if governments
need to, they tax the population further to try
and make up for the lost revenues from
businesses that have evaded the tax man (or
woman).
Why would companies do this, especially
when some of them portray themselves as
champions of the consumer? The reasons are
many, as this article will explore. In
summary, companies look for ways to
maximize shareholder value. Multinational
companies are in particular well-placed to
exploit tax havens and hide true profits
thereby avoiding tax. Poor countries barely
have resources to address these — many have
smaller budgets than the multinationals they
are trying to deal with.
Yet, companies and influential individuals
also pour lots of money into shaping a global
system that they will hope to benefit from. If
the right balance can’t be achieved, not only
will attempts to avoid taxation and other
measures undermine capitalism (which they
claim they support) they will also undermine
democracy (for even responsible governments
may find it hard to meet the needs of their
population).
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