Ottawa (July 29, 2020) — The International Consortium of Investigative Journalists (ICIJ) has produced a visual explainer showing how corporations use tax havens. It shows the role banks, law firms and accountants play in enabling corporations to use tax havens. While the focus is on an aircraft leasing company using shell companies in Mauritius to dodge taxes, the process is similar for any company using tax havens.
Banks and accounting firms helping people dodge taxes also involved in privatization
A number of the companies mentioned in the ICIJ visual explainer will be familiar to people fighting privatization. Ernst and Young and KPMG both get a lot of business from the privatization of public services. Deutsche Bank is heavily involved in financing P3 privatization schemes.
Tax avoidance fuels conditions that lead to privatization
It’s not surprising that the same businesses that help large corporations and the wealthy use tax havens are also involved in privatization. The loss of revenue from tax avoidance is often used to justify privatization.
As NUPGE’s Privatization Playbook shows, tax avoidance and tax cuts means governments lose revenue and that is used to justify starving public services of funding. When the lack of funding affects the quality of services, the privatization industry is quick to push privatization as a solution.
Public pay twice
For the law firms, banks and accounting/consulting firms involved in both tax havens and privatization, the relationship between tax dodging and privatization is very profitable. Their work helping individuals and corporations use tax havens leads to a reduction in government revenues. And then the impact of the reduction in revenues on public services can lead to more privatization schemes.
For the rest of us, it means we’re paying twice. Once to make up for the revenue governments lose when wealthy corporations and individuals are able to use tax havens and then again because privatization means higher costs and poorer service.