TAX WARS – English Script 93’ version

 

 

TC 01:00:09

Narration

To cope with global warming and its consequences – natural disasters, food insecurity, pandemics and growing inequality – our planet desperately needs money.

 

But from where?

 

TC 01:00:32

Narration

While governments are drowning in debt, multinationals have never been richer.

Indeed, most of them have mastered the art of avoiding taxes through elaborate tax arrangements.

 

TC 01:00:54

Narration

With multinational corporations now richer than many countries, civil society is organizing an opposition movement.

 

TC 01:01:03

Narration

At the helm of this combat, we find leading international experts, knights of tax justice who are fighting these unfair practices of tax optimization.

 

Economists … lawyers and former elected officials.

 

They embody a new hope.

 

TC 01:01:29

Narration

They have already managed to defeat some of the incredible tax privileges multinationals enjoy today.

 

A first victory in the latest of a series of wars as old as civilization:

Tax Wars.

 

 

 

TC 01:02:12

Narration

In just a few decades, multinationals have taken control of the global economy. They have frequently built their power by using tax havens and depriving governments of precious tax revenue.

 

TC 01:02:26

Narration

And yet, we urgently need to address the explosion of climate-related catastrophes: hurricanes, droughts, heat waves…the planet is burning.

Healthcare systems are failing.

And over 800 million people are starving.

 

TC 01:02:47

Narration

A wind of revolt is sweeping the planet. Nothing can justify the all-powerful multinationals and the way they manipulate their accounting.

Like Star Wars, the story we’re going to tell you is about justice, about a group of knights fighting the dark forces of globalization.

 

TC 01:03:10             

Narration

They have founded an Independent Commission for the Reform of International Corporate Taxation, with the acronym ICRICT.

This commission for fiscal justice brings together leading economists like Nobel Prize winner Joseph Stiglitz, Thomas Piketty, the author of the worldwide bestseller Capital in the Twenty-First Century and Jayati Ghosh specialist on development issues.

 

TC 01:03:40

Narration

They travel the world to convince citizens and governments of the urgency of reforming a century-old tax system that no longer fits our world.

 

Their goal is quite clear: to get multinationals to pay their taxes like everyone else.

 

TC 01:03:58

JOSEPH STIGLITZ

Governments all over the world are in desperate need for funds and the increase in corporate profits tells you where the money is: The money is in the pocket of the large corporations, the multinationals.

 

 

TC 01:04:13

Thomas PIKETTY

On a un système qui est devenu profondément biaisé au bénéfice des multinationales ce qui est catastrophique pour notre contrat social.

We have a system that has become deeply biased in favor of multinationals, which is catastrophic for our social contract.

 

TC 01:04:23

Jayati GOSH

Just like a citizen assumes that he or she has to pay tax. Similarly, large corporations, big multinationals also have to assume that they have to pay tax.

 

 

TC 01:04:39

Narration

With multinationals accounting for half of the world’s commerce, how is it possible that they hardly pay any income tax?

 

TC 01:04:49

CHAPTER 1: THE EMPIRE OF TAX EVASION

 

TC 01:05:03

Narration

The first stop on our journey in the galaxy of tax evasion takes us to Belfort, France.

Eva Joly is one of the founding members of the commission.

Born in Norway, but most of her professional life has been spent in France.

A former magistrate and a former member of the European parliament, today she is a lawyer. She has made the fight against tax evasion her priority.

 

 

TC 01:05:40

Eva JOLY

Là je suis en route pour assister à une conférence de presse, ça concerne la façon dont les multinationales minimisent leur base imposable depuis des décennies dans le monde. Il s’agit de l’ancienne entreprise Alstom, qui a été très importante en France, le TGV dans lequel nous sommes est une production d’Alstom. Mais c’est aussi des turbines qui sont importantes dans les centrales d’énergie nucléaire. Et cette technologie de pointe française a été cédée dans des conditions très discutables à General Electric en 2014.

 

I'm on my way to take part in a press conference. We look at how multinationals have minimised their taxability for decades all over the world. This case is about Alstom, a former major company in France. This TGV train we are traveling on is produced by Alstom. But also turbines, which are important in nuclear power plants. And this cutting-edge French technology was sold under very questionable conditions to General Electric in 2014.

 

 

TC 01:06:23

Narration

Since Alstom Energie was taken over by the American company General Electric, profits have evaporated.

The company’s union representatives contacted Eva Joly.

Together, they are accusing General Electric of committing tax evasion causing economic harm to its employees.

 

TC 01:06:43

Philippe Petitcolin Syndicaliste General Electric

-         Je vous ai imprimé le communiqué de presse. Vous pouvez y jetter un oeil.

-         I have printed the press release. You can have a look.

 

Eva Joly

-         Eva Joly  : D’accord, Super.

-         Okay, great.

 

TC 01:06:51:08

Philippe Petitcolin Syndicaliste General Electric

Jusqu'en 2015, nous avions des centaines de millions de bénéfices et les salariés touchaient une prime de participation qui pouvait représenter 1 à 2 mois de salaire. Avec l'évasion fiscale et le déficit artificiel, c'est devenu un élément de rémunération que les salariés ne touchent plus. Donc ça, ça a un impact direct dans le pouvoir d'achat des salariés.

 

Until 2015, we had hundreds of millions in profits. Employees received a profit-sharing bonus of up to 1 or 2 months of salary. With the tax evasion and artificial deficit, employees no longer receive this compensation.

So it directly affects the purchasing power of employees.

 

 

TC01: 07:10

Narration

As a union representative, Philippe Petitcolin and his colleagues have access to the company’s accounts. They have called in an expert to try to understand General Electric’s accounting.

 

TC 01:07:25:02

Philippe Petitcolin

On a pris conscience en fait que l'entreprise est un milieu clos où ni les journalistes, ni les avocats, ni les politiques ne peuvent rentrer. Et en fait qu’on avait un rôle essentiel, c'était qu'il y avait que nous qui pouvions expliquer à l'extérieur de l'entreprise ce qui se passait à l'intérieur.

Voilà l'usine concernée par la plainte.

We realized that the company is a closed environment, where neither journalists, lawyers, press nor politicians may enter. And we actually played an essential role, which was to explain to the outside world what was happening inside the company. This is the factory targeted by the complaint.

 

TC 01:07:50

Narration

Union representatives discovered that General Electric had transferred Alstom Energie’s profits outside of France to several tax havens.

It’s a classic practice used by all multinationals.

 

First, product marketing was relocated to Switzerland.

As a result, all of the profits made in France are now booked in Switzerland.

How?  Thanks to a tax optimization technique called transfer pricing.

Let’s take a turbine replacement part made in Belfort with a production cost of 100 euros.

 

TC 01:08:29

Narration

Before it was relocated to Switzerland, the Belfort site sold this part to its end customer for 400 euros. Thus making a profit of 300 euros.

 

Now, Belfort sells the same spare part to its Swiss General Electric subsidiary for 110 euros, which then sells it to its end customer for 400 euros.

As a result, the Belfort factory only makes 10 euros whereas General Electric posted a profit of 290 euros in Switzerland.

The same factory made the same spare part but now nearly all of the profits are located in Switzerland where they are virtually untaxed.

 

TC 01:09:16

Philippe Petitcolin Syndicaliste General Electric      

Et donc tous les profits sont localisés en Suisse alors qu'il n’y a aucune substance économique en Suisse, il n'y a pas d'usine, il n'y a pas d'ouvriers, il n'y a personne qui travaille sur le sujet.

All the profits are registered in Switzerland, even though there is no substantial economic activity there. There is no factory, there are no workers, no one works there.

 

TC 01:09:25

Narration

The second trick revealed by the unions, General Electric moved the Belfort factory patents to Switzerland. Now, each time the Belfort plant produces a turbine, it must pay a royalty to the entity holding the patents…in Switzerland.

 

And, finally their third trick, Belfort must now pay for the right to use the General Electric brand that is registered in the tiny state of Delaware, a tax haven inside the United States.

 

TC 01:09:55:04

Philippe Petitcolin Syndicaliste

Au Delaware, aux États-Unis, où, de la même manière, c'est une société boîte aux lettres. Il n'y a aucun salarié qui travaille pour la marque. Et donc là, c'est aussi une façon de localiser les profits dans les paradis fiscaux.

In Delaware, in the US, the company just has a P.O. box. No employees working for the brand. This is another way for GE to register profits in tax havens.

 

TC 01:10:08

Narration

General Electric isn’t an isolated case. All major corporations use these types of practices. And this is how most of the profits of multinationals go untaxed.

 

TC 01:10:22

Narration

Creative accounting isn’t a crime. But, there are legal limits that mustn’t be crossed. For Eva Joly, legal action is the way to attack tax evasion by multinationals, and she’s raising awareness in the media.

 

TC 01:10:39:19

Eva JOLY

Nous sommes en face de délits intentionnels. Et il est temps de considérer que le directeur financier qui organise l'évasion fiscale à hauteur de 550 millions d'euros sur quatre ans, il est responsable dans sa liberté et sur son patrimoine.

We are looking at deliberate crimes. It is time to consider that the CFO, who organises the tax evasion of 550 million euros over four years, he is responsible and should be held accountable.

 

TC 01:11:01:16

Philippe PETITCOLIN Syndicaliste

Il est maintenant temps de dire stop à tout ça. Donc, face  à l'immobilisme de Bercy contre la lutte dans l'évasion fiscale, les syndicats ont choisi de saisir la justice pour faire respecter des règles.

The time has come to put a stop to all this. And since French authorities are not doing anything to stop tax evasion, the unions have decided to take legal action.

 

TC 01:11:15:06

Eva JOLY

On voit qu'en réalité, le groupe a un déficit complètement artificiel. Le plus choquant, c'est que on fait payer des redevances à Belfort pour des brevets qui sont tombés dans le domaine public. C'est n'importe quoi. Si on ne truquait pas les comptes, Belfort est à l'équilibre.

In reality, the group's deficit is completely artificial. The most shocking is that Belfort has to pay royalties for patents that have fallen into the public domain. It's ridiculous. If they didn't cook the books, Belfort would be in the black.

 

TC 01:11:34

Narration

These practices have had dire consequences for the French government and the city of Belfort. Tax optimization comes at a cost. And Eva Joly is there to remind us of this whenever she can.

 

 

TC 01:11:50

Eva JOLY interview FRANCE BLEUE

Journaliste

- Eva Joly bonjour

- Eva Joly, good morning.

 

Eva JOLY

- Bonjour

- Good morning.

 

Journalist

- De l'argent échappe aux impôts français. C'est ce qu'il faut retenir ?

- Money escapes French taxation. Is that the main point?

 

Eva JOLY

- Oui, nous pouvons porter plainte pour blanchiment de fraude fiscale, abus de confiance et pour présentation de comptes inexacts.

- Yes, we can file a complaint for tax money laundering, breach of trust and for presenting inaccurate financial statements.

 

TC 01:12:09

Narration

France’s financial prosecutor obtained a search warrant for General Electric’s site. An investigation is underway for tax money laundering and aggravated tax fraud that could take several years, which may be too late for the Belfort factory.

 

TC 01:12:29

Philippe PETITCOLIN syndicaliste

Les conséquences les plus graves, c'est que le déficit artificiel de Belfort est l'argument massue utilisé par General Electric en permanence pour ne pas augmenter les salaires, pour ne pas investir, pour justifier les délocalisations et pour justifier les suppressions d'emplois en disant “nous ne sommes pas rentables, nous devons nous restructurer, nous devons délocaliser dans les pays à bas coûts” et donc là ça impacte directement l'emploi à terme des salariés.

The most serious consequence is that the artificial deficit of Belfort is the argument constantly used by General Electric in order to not raise salaries, to not invest, to justify offshoring and layoffs saying: "We're not profitable, we have to restructure and move operations to low-cost countries". This directly impacts the long-term employment of the employees.

 

TC 01:13:04:22

Eva JOLY

Le fait que la justice se saisisse de la fiscalité des multinationales, je dirais qu'il est vraiment temps. Je pense que pendant des décennies, tout était caché : les citoyens ne comprenaient pas, ne savaient pas. Et aujourd'hui, je pense que c'est totalement intolérable.

It is about time that the courts are getting involved in multinational taxation. For decades, everything was hidden: citizens didn't understand, didn't know. Today, I think it is absolutely intolerable.

 

TC 01:13:20

Narration

General Electric’s accounting practices aren’t rare; they’ve become systematic. Outrage at these practices is widely shared, including by Joe Biden, the president of the world’s leading economic power.

 

TC 01:13:43:12

Joe BIDEN (archive)

In 2020, 55 of the largest corporations in America, the Fortune 500, made $40 billion in profits and paid zero in federal taxes. Zero ! folks, it's simply not fair.

 

TC 01:14:02

Narration

No country is spared. Globally, the revenue loss is colossal: nearly 600 billion dollars per year according to the International Monetary Fund.

 

TC 01:14:14:14

Thomas PIKETTY

On a reconstitué une sorte de système fiscal privilégié, enfin, fait de privilèges, qui n'est pas sans rappeler les privilèges fiscaux qui pouvaient exister dans l’Ancien Régime, en France ou dans d'autres pays européens à la fin du XVIIIᵉ siècle où vous aviez en gros, c'était l'aristocratie et le clergé qui échappaient légalement à l'impôt.

 

We built a privileged tax system, not unlike the tax privileges that could exist in pre-revolutionary France or in other European countries at the end of the 18th century, where you basically had the aristocracy and the clergy who legally avoided taxes.

 

TC 01:14:41

Narration

Thomas Piketty is a French economist and a professor at the Paris School of Economics, he is the author of the international best seller Capital in the Twenty-First Century. His work on economic inequality has inspired a generation of economists.

 

TC 01:14:59

Thomas PIKETTY

Donc on est censé être dans un monde très différent, mais de facto, on a on a un système fiscal où ces acteurs économiques les plus puissants parviennent à échapper à l'impôt de droit commun, ce qui est évidemment catastrophique pour notre contrat social en général.

We are supposed to live in a different world now, but in reality, we have a tax system where the most powerful economic players manage to escape taxation, which is catastrophic for our social contract.

 

  TC 01:15:14:06

Daniel BERTOSSA

Now, those who benefit from the current global tax system. What they try to do is to stop the debate from occurring. And so they tell workers things like “it's commercial in confidence”. “We can't tell you about our tax affairs”. Or they say, “look, there's nothing you can do to change it, we will always find a way around it”. Or they say “it's very complicated. You couldn't possibly understand”.

 

TC 01:15:36:07

Jayati Ghosh

Basically, this is a big con globally and nationally, but if enough people realize it's a con, only then can you change it.

 

TC 01:15:45

Narration

Jayati Ghosh is Indian and a specialist on development issues. She teaches economics in India and the United States.

The UN regularly consults her on tax issues.

 

TC 01:15:56:10

Jayati Ghosh

And at the moment, because it's made so technocratic and in such a jargonistic and complicated fashion, people say, Oh, we don't understand it, we can't deal with it. And so we leave it to the experts.

 

TC 01:16:10

Narration

In order to understand, we need to go back in time, to the beginning of the 20^th century and the origins of the world’s tax system.

 

TC 01:16:19:10

Daniel BERTOSSA

The current multinational corporate tax system was built almost 100 years ago. Capitalists would build things in their country. The workforce from that country. And then they would sell things into that market. Or they put them on boats and move them somewhere else.

 

TC 01:16:37

Narration

American automaker Ford produced its Model Ts on the assembly line. And  exported its auto parts by boat. The cars were then assembled in Europe.
The globalization of the economy was taking its first steps. Just like multinational companies..

 

They were essentially American or European companies, and they complained that their foreign profits were being taxed multiple times.

 TC 01:17:02:18

Gabriel ZUCMAN

Taxer les multinationales, c'est une question compliquée. Est ce qu'on taxe dans le pays du siège social ? Est ce qu'on taxe dans le pays de consommation, là où les consommateurs sont situés ? Est ce qu'on taxe dans le pays où la production a lieu ?

Taxing multinationals is complicated. Do we tax them in the country where the HQ is? Do we tax in the country where the products are sold and consumers are located? Or in the country where the production is?

 

TC 01:17:19

Narration

Gabriel Zucman is French and the youngest member of the Commission for tax justice.

He heads the European Tax Observatory, whose research has uncovered the scale of multinationals’ tax evasion.

He’s one of the world’s leading experts on tax evasion.

 

TC 01:17:35:01

Gabriel ZUCMAN

Dans les années 20, la Société des Nations, qui est l'ancêtre de l'ONU, commissionne quatre économistes pour qu'ils écrivent un rapport sur la meilleure façon de taxer les sociétés multinationales pour éviter les risques de double taxation.

In the 1920s, the League of Nations, precursor to the UN, tasked 4 economists to write a report on the best way to tax multinationals to avoid double taxation.

 

 

TC 01:17:52

Narration

In Geneva, at the League of Nations headquarters, envoys from the world’s richest countries agreed to create the first international tax system.

 

In 1928, treaties were signed which gave the subsidiaries of multinationals an autonomous tax status. Considering them independent from their parent company.

For multinationals, this is the beginning of a tax jackpot. They can now manipulate their accounting to declare their profits wherever they please.

In other words, where there is little or no taxation.

 

TC 01:18:29

Gabriel ZUCMAN

On a réussi à éviter ces doubles impositions, ces triples impositions. On a tellement bien réussi qu'en fait, dans beaucoup de cas, aujourd’hui, il y a plutôt une non-imposition, une imposition zéro. Parce que ce que les multinationales ont fait, c'est qu'elles ont délocalisé, de façon artificielle, leurs bénéfices dans des territoires où la fiscalité est faible ou nulle.

We managed to avoid double or even triple taxation. We managed so well that in fact in many cases today there is no taxation at all. What the multinationals did was to artificially relocate their profits to areas where taxation is low or nil.

 

TC 01:18:51

Narration

In the aftermath of World War Two, taxes rose sharply. The few multinationals of the time had even more incentive to offshore their profits.

In the United States, tax rates were over 50% for companies and even higher for the wealthiest individuals.

 

TC 01:19:10

THOMAS PIKETTY

Aux États-Unis en moyenne, de 1930 à 1980, le taux supérieur de l'impôt sur le revenu appliqué sur les plus hauts revenus atteint 81 %. Non seulement ça n'a pas tué le capitalisme étas-unien, on s'en serait rendu compte, mais c'était même la période de prospérité maximale des États-Unis.

Pourquoi ? Parce que, en fait, la clé de la prospérité, c'est d'abord l'éducation. En l'occurrence, les États-Unis avaient une avance éducative considérable : 80 à 90 % d'une classe d'âge qui allait dans l'enseignement secondaire long dès les années 50. À un moment, on était à 20 /30 % en France, en Allemagne, au Japon et donc cette très forte progressivité fiscale observée au milieu du XXᵉ siècle, non seulement elle n'a pas tué la croissance, mais au contraire elle a accompagné ce processus de construction de l'Etat social qui demande de la justice fiscale.

In the US, from 1930 to 1980, the highest average tax rate on revenue reached 81%. It did not kill US capitalism; it was rather a period of high prosperity in the US. Why? Because the key to prosperity is first of all education. And the US had an advantage: 80-90 % of a certain age group completed secondary education even in the 1950s. At a time when it was 20 or 30% in France, Germany, and Japan. The progressive fiscal policies of the mid-20th century did not kill growth. In fact, it helped build a social pact that requires fiscal justice.

 

TC 01:19:58

Narration

The election of Ronald Reagan in 1980 radically changed the post-war fiscal and social pact.

 

TC 01:20:07

Ronald Reagan (archive)

“ Government is not the solution to our problems. Government is the problem”.

 

TC 01:20:17

Narration

According to the American president, they needed to reduce government spending and cut taxes to boost the economy.

 

TC 01:20:29

Narration

For multinationals, it was the beginning of a new era…their profits went stratospheric.

 

TC 01:20:42

Ronald Reagan (archive)

I want to talk about taxes. About what we must do as a nation this year.
Comparing the distance between the present system and our proposal is like comparing the distance between a Model T and the Space Shuttle. This, then, is our plan, America’s tax plan. A challenge to give the USA the lowest overall marginal rates of taxation of any major industrial democracy . Thank you, God bless you, good night.

 

TC 01:21:11

Narration

It was the start of a global race to the bottom in terms of taxation. Governments competed fiercely to attract business investment.

As a result, in 40 years, the average tax rate on profits has been cut in half.

 

TC 01:21:28

JOSEPH STIGLITZ

Right now we have a race to the bottom. Countries think wrongly, but think that, and they're told by the corporations “if you lower the taxes, business will come to you”.

 

TC 01:21:41

Narration

Joseph Stiglitz, the American winner of the Nobel Prize in economics, was also a head economist for the World Bank. He is one of the founding members of the commission.

For him, fiscal competition is the most toxic aspect of globalization.

 

TC 01:21:57

JOSEPH STIGLITZ

But of course, it's a zero sum game. I lower my taxes, neighbor lowers his taxes. Who's the winner? The corporations. Who's the loser? Ordinary people who have to pay more in their taxes because the corporations aren't paying their fair share. And of course, if we don't have public money, our society can't function.

 

TC 01:22:25  CHILI

Narration

Second stop on our trip: Chile. A country that for decades has waged war on taxes.

 

It has long been a laboratory for neoliberalism.

 

In the 1970s, even before the election of Reagan or Thatcher, a handful of economists convinced dictator Augusto Pinochet to privatize most public services. They were known as the Chicago Boys.

 

They studied at the University of Chicago under Milton Friedman, one of the high priests of liberalism and a personal advisor to the Chilean dictator.

 

His ideology was written in stone in the country’s constitution.

 

TC 01:23:12

Magdalena Sepúlveda

In Chile, we have been the laboratory of neoliberal policies in which everything is privatized, from education to health to social protection.

 

TC 01:23:23

Narration

Magdalena Sepúlveda is Chilean. She is a lawyer and was a special UN rapporteur on extreme poverty and human rights.

 

TC 01:23:34

Magdalena Sepúlveda

We still have the Constitution that was drafted during the Pinochet regime. So the Constitution said that first it’s the private sector that should provide for education, health, social protection or water.. and only when they can not do it or they don’t want to do it, then the public sector comes in. And this is extremely damaging as you can imagine. If public services are only for the poor, they are poor public services.

 

TC 01:24:17 Narration

Three decades after the fall of his dictatorship, Augusto Pinochet’s economic model is still in place.

 

TC 01:24:29

NAYARETH QUEVADO

La salud es un derecho fundamental que las y los chilenos no tenemos. O sea, tenemos una salud de primera categoría para los que pueden pagar con un seguro privado en las clínicas caras de Santiago, y una salud de segunda categoría para él que no puede pagar. Creo que además la pandemia develó el error de la privatización de los servicios de salud. Hay los temas de infraestructura, los temas de acceso a los medicamentos que la gente no tienen. Es falta de recursos.

Health is a fundamental right that we Chileans don't have. That is, we have first class health care for those who can pay with private insurance in the expensive clinics of Santiago, and a second-rate health system for those who cannot pay. I think the pandemic has revealed the mistake of privatising healthcare services. There are infrastructure problems, issues concerning access to medicines that people don’t have. Lack of resources in general.

 

 

TC 01:25:06

NAYARETH QUEVADO

¿Y acá, faltan recursos?

Do you lack resources here? 

 

 

TC 01:25:08

Carolina VARAS Sage femme

Por supuesto que sí, siempre.

Y obviamente son turnos de 12 horas que son agotadores. Sin pensar que as veces tampoco hay gente que cubre el turno de la noche entonces te toca también quedarte a la noche y cubres 24 horas. No debes mostrar que tú te sientes molesta por otra cosa porque no tendrían en el fundo porque importarle, e interferir en su proceso y en su trabajo de parto.

Of course, always. And you have to work 12-hour shifts that are exhausting. And sometimes there are no people to cover the night shift so you have to stay on through the night and work for 24 hours straight. But you don't really show that you're upset because it should not interfere with your work as a midwife assisting in childbirth.  

 

TC 01:25:38

Maria Eugenia JIMENEZ  Sage femme

En este hospital, la demanda es infinita y los recursos son siempre limitados. Es una problemática que se ha venido arrastrando mucho tiempo desde que en este país se empezó a mercantilizar la salud. Es un derecho fundamental que no puede ser visto como un medio de consumo. No es consumo.

In this hospital, demand is infinite and resources are limited. The problem began when this country considered health to be a commercial product. It's a fundamental right that shouldn't be considered a consumer product. It's not a product.

 

 

TC 01:26:03

Narration

The lack of investment from the government has made Chile one the most unequal societies in the world.

 

In the hills above Valparaiso, 200 families have established themselves over the years in what has eventually become the Mesana shantytown, a place abandoned by the public authorities.

 

TC 01:26:21

Magdalena Sepúlveda

El país ha crecido, hay un Chile más próspero, pero la prosperidad ha sido acaparada por unas elites, y no ha llegado de manera justa a toda la población.

 

The country has developed, Chile is more prosperous, but this prosperity has been monopolized by a part of the elite; it has not fairly benefited the whole population. 

 

 

TC 01:26:39

Celia DURÁN Habitante de Mesana (en marchant)

Acá se reparte el agua una vez por semana en camión aljibe. ¿ Ves los tanques allí? Eso son los que se llenan de agua por el camión aljibe, y de allí, las mismas familias han puesto cañería y tienen un poquito de comodidad dentro de la casa.

Lo más difícil de vivir en este campamento es el acceso. Nos queda muy retirado del centro, muy retirado de la locomoción. El mismo hecho de tener la tierra, LA, es complicado.

 

Here, water is distributed once a week by tanker trucks. Do you see those water tanks over there? They are filled with water from the tanker trucks. And from there, people have installed plumbing themselves in order to have some comfort in their homes.

The most difficult part of living here is access. We are far from the centre and from public transport. And to live on top of dirt and mud makes things complicated.

 

 

TC 01:27:30

Magdalena Sepúlveda (off)

Estamos hablando ya de un campamento que empezó hace prácticamente 30 años. Hay una ausencia total del Estado. No hay pavimentación, no hay acceso a la salud directo. No hay agua y saneamiento en las casas. No hay ninguna política. No hay impuestos para satisfacer estas demandas.

 

This dwelling emerged almost 30 years ago. And the government is completely absent. There is no pavement, no direct access to healthcare, no water or sanitation in the houses. There is no government policy and no taxes to address these needs.

 

TC 01:27:55

Celia DURÁN Habitante

Claro, nos encontramos excluidos de muchas cosas, no solamente del transporte, la sociedad. Yo personalmente me siento excluida inclusive de pertenecer a cualquier gobierno que haya habido en este país. Somos unos “NN” para ellos. Y, sin embargo, pagamos impuestos.

 

Of course, we are excluded from many things  not only from transportation, but from society. I feel personally excluded. I don't feel represented by any government in the history of this country. For them, we are less than nothing. Yet we also pay taxes. 

 

 

TC 01:28:26

Magdalena Sepúlveda

Queremos democratizar la política fiscal. Queremos decirles a las personas: si las transnacionales no pagan lo que corresponde, nos afecta en la vida diaria, nos afecta en la forma que vivimos. Crea desigualdad, crea desazón social, y crea violación de derechos.

 

We also want to democratize tax policies. We want to tell people:  if multinationals don't pay their fair share it affects our daily lives,  it affects the way we live.  It creates inequality,  it creates social unrest  and it creates violation of rights.

 

TC 01:28:50

Narration

At the end of 2019, an increase of a few cents on a subway ticket inflamed the country.

Faced with inequality, Chileans exploded in anger.

The richest 1% grab 25 % of the country’s revenue.

Students face decades of debt to finance their studies.

And only a small number of Chileans have access to quality hospitals.

Given the scale of the demonstrations, the army was sent in..

 

TC 01:29:21

Magdalena Sepúlveda

En octubre del 2019, la población, harta de más de 30 años de políticas neoliberales, exige el cumplimiento de los derechos económicos, sociales y culturales. Hay una demanda por salud, una demanda por mejor educación, por unas mejores pensiones.

 

In October 2019, people were fed up with more than 30 years of neoliberal policies and demanded the fulfillment of economic, social and cultural rights. Their demands include health, better education and better pensions.

 

 

TC 01:29:46

Narration

In Chile, like elsewhere, government withdrawal has had a devastating impact on public services, destroyed social cohesion and fueled extremism.

 

Yet, the devastating effects of cutting taxes to the bone have long been known. As early as 1937, American Treasury Secretary Henry Morgenthau wrote to president Franklin Roosevelt: “Taxes are what we pay for civilized society. Too many individuals, however, want the civilization at a discount.”

 

TC 01:30:21

GABRIEL ZUCMAN

Sans impôt, il n’y a pas de société. La question de l’impôt c’est vraiment la question sans doute, philosophique, démocratique, principale, c’est à dire que sans impôt, c’est le chacun pour soi, c’est l’absence de lien social, l’absence de société. Tous les pays qui ont réussi à se développer, à devenir riches, ce sont des pays qui ont réussi à construire des systèmes fiscaux avec des taux de prélèvements obligatoires élevés et des ambitions élevées en matière de redistribution.

Without taxes, there is no society. Taxation is really a basic philosophical and democratic principle. Without taxes, it's every man for himself, no social ties, no society. All countries that have managed to develop and prosper have built tax systems with high rates of compulsory levies and ambitious redistribution goals.

TC 01:30:49

Narration

The tax wars are a clash between two world views.

One side claims that taxes put a break on economic development, the other side that taxes are the driving force.

 

What is certain is that the number of multinationals increased dramatically at the end of the 1980s with the globalization of the economy.

 

In 40 years, they’ve increased from a few thousand to over 120,000 today. They make trillions of dollars in profits each year, and most of them pay virtually no taxes.

 

In 2008, a financial crisis of unprecedented magnitude forced governments to finally wake up.

 

TC 01:31:35

CHAPITRE 2  THE AWAKENING

 

TC 01:31:48

David PUJADAS (archive)

Dans l'actualité ce soir la tempête sur les marchés financiers. La célèbre banque d'affaires américaine Lehman Brothers se déclare en faillite, victime de la crise des subprimes.

Tonight's headlines: Storm in the financial markets. The famous US investment bank Lehman Brothers declares bankruptcy, a victim of the subprimes crisis.

 

TC 01:31:57

JOURNALIST

These financial market convulsions raced around the world like a tsunami.

 

TC 01:32:02

SWISS JOURNALIST (French speaking)

L’Europe déprime, l’Asie flanche et Bombay… accuse le coup.

Europe is down, Asia is faltering, and Bombay … feels the effects.

 

TC 01:32:05

INDIAN FORTUNE MANAGER (dubbed in French)

Cela donne l’impression que les marchés ne vont pas retrouver leur gloire du passé.

It looks like the markets will not return to their past glory.

 

TC 01:32:11

Narration

The world’s economy lurched into the most severe crisis since the crash of 1929. Unemployment soared, deficits and public debt exploded, forcing governments and central banks to massively support the economy. For the advocates of deregulation and limited government interference, it was a rude awakening.

 

TC 01:32:32

DANIEL BERTOSSA

When the global financial crisis hit, a lot of myths were cracked and people became very angry and they started to question the basis upon which the global economy was built and in whose interests it was built. And that anger translates into political pressure. So we had David Cameron, who was a right wing conservative in the UK.

 

TC 01:32:52

DAVID CAMERON Archive

I am a low tax conservative, but I'm not a “companies should pay no tax” conservative. And businesses who think they can carry on, they need to wake up and smell the coffee. Because the public who buy from them have had enough.

 

TC 01:33:10

DANIEL BERTOSSA

Nicolas Sarkozy in France.

 

 

TC 01:33:13

Nicolas SARKOZY ARCHIVE

Nous ne voulons plus de paradis fiscaux, le message est très clair : nous n’en voulons plus.

We want no more tax havens.

The message is clear: We want no more of that.

 

 

TC 01:33:20

DANIEL BERTOSSA

They were forced for political reasons to begin to talk about the need to raise taxation. And that's how it was kicked off through a series of quite conservative and right-wing governments feeling political pressure to raise revenues because they could not implement any more austerity without having to face political consequences that they didn't want to have to deal with.

 

TC 01:33:45

Narration

Governments searched desperately for new revenue streams. They turned to the OECD, an organization whose members are the world’s richest countries.

 

Pascal Saint-Amans was the Director of the Centre for Tax Policy and Administration at the OECD.

 

For 10 years, he led negotiations against the tax evasion practices of multinationals.

 

TC 01:34:08

PASCAL SAINT-AMANS. Directeur de la fiscalité - OCDE

Quand la crise est intervenue, les chefs d'Etat et de gouvernement du G20, qui se sont réunis pour la première fois le 15 novembre 2008, ont dit “la taxation des multinationales a besoin d'une réforme”. Les règles internationales ont été élaborées dans les années 1920 et donc elles ne sont plus adaptées et il a fallu la crise financière internationale pour que l'ensemble des pays se réveillent et disent “il faut changer les règles, il faut mettre fin aux paradis fiscaux”.

 

When the crisis hit, the G20 heads of state who met on 15 November 2008, said the taxation of multinationals must be reformed. The international regulations were drawn up in the 1920s and no longer fit. It took a global financial crisis for the international community to wake up and say: "We must change the rules and put an end to tax havens."

 

TC 10:34:37

Narration

Strengthening tax transparency and preventing the most aggressive schemes … The OECD’s intentions are noble, but they lack ambition.

 

TC 01:34:49

For several NGOs, the OECD’s inaction is unacceptable. They decide to form a group of internationally renowned experts to promote their ideas. Hence, ICRICT, the independent global commission for fiscal justice was formed.

 

It’s the beginning of a new hope.

 

 

TC 01:35:08

SOL PICCIOTTO Professeur de fiscalité

In 2013, we had identified the OECD was setting up this project, which was supposed to reform international corporate taxation.

 

TC 01:35:17

TOBY QUANTRILL Responsable de l’ONG CICTAR 

So the concern, as I recall, was that because it was being developed in the OECD and the OECD is effectively a club of rich countries, that it would be heavily dominated by the interests of rich countries.

 

TC 01:35:30

SOL PICCIOTTO

So then a meeting was called because we needed some kind of process to shadow the OECD and develop a critique of the OECD.

 

TC 01:35:39

TOBY QUANTRILL

And it was a meeting in some of the worst meeting rooms in the city, and there were 15 people in a tiny basement room, 15 sweaty activists in a basement versus the entire G20, and the OECD. It didn't seem very often very equal. So you needed to bring in some people who have a global profile to help develop the ideas, alternative ideas.

 

 

TC 01:36:02

Narration

It took two years to recruit knights capable of fighting the empire of the multinationals. But in 2015, the Independent Commission for the Reform of International Corporate Taxation was born.

 

TC 01:36:15

Currently, Joseph Stiglitz and Jayati Ghosh are its co-chairs.

 

 

TC 01:36:20

Jayati GHOSH

My dream would be the multinational corporations would not be in a position to dictate to governments about what they do, how they do it, and what damage they can do to the economies.

 

TC 01:36:31

JOSEPH STIGLITZ

My dream is actually very simple: that every corporation pay its fair share of its taxes. Some basic principles of social justice.

 

TC 01:36:44

Narration

In addition to it’s most famous members, the commission brings together 14 members from completely different geographic and professional backgrounds.

 

Thanks to their notoriety, governments and international institutions are willing to listen to their ideas.

 

They are part of a much broader coalition of NGOs exposing the damage caused by tax evasion.

 

Their aim? To put pressure on governments to act.

 

 TC 01:37:14

SUSANA RUIZ RODRIGUEZ

La Comisión tiene algunos de los expertos más potentes que existen en este momento, con voces más reconocidas de lucha contra las desigualdades y de propuestas también de análisis económico más importantes. Y eso es lo que nos ha permitido también que ICRICT movilice a ministros de Economía y Finanzas de muchos países.

 

The Commission has the world's most competent experts at its disposal.  They are renowned voices in the fight against inequality, and their economic proposals and analyses are among the most important. And this is what has enabled ICRICT to mobilize the economic ministers of many countries.

 

 

TC 01:37:34

Narration

Wayne Swan is Australian and a former Minister of finance and Deputy Prime Minister.

He has fought for years against the tax evasion of multinationals.

As a member of Australia’s Labor Party, he brings his political expertise to the commission.

 

 

 TC 01:37:52

Wayne SWAN

I was treasurer and a member of the G20 finance ministers. I joined ICRIT because I saw in my country the evidence of the tax termites radically eating away at the tax base in Australia.

 

TC 01:38:10

JOSEPH STIGLITZ

We thought there ought to be a strong voice explaining that there is a need for a fairer and I think more efficient global tax regime. So this was a war that I had been long engaged in. I would say with relatively little fruit but the time might be ripe.

 

 

 TC 01:38:33

Narration

The commission members are up against powerful adversaries - a galaxy of multinationals with nearly unlimited resources at their disposal.

 

 

 TC 01:38:44

JOSEPH STIGLITZ

Everybody is afraid. The multinationals have done a really good job of instilling fear. “If you have taxes, business is going to run away. It will create an anti-business climate”. And unfortunately, some of the developed countries listened very carefully to the multinational corporations. Not a surprise, they’re very influential in the politics of the advanced countries.

 

 

TC 01:39:19

Narration

Ideas are weapons and the commission has plenty. For them, there’s no point in reforming a failing system. They propose to revolutionize it.

 

Rather than trying in vain to tax multinationals in each individual country, why not tax their total world-wide profits as a whole?

 

This is called unitary taxation.

 

 TC 01:39:43

Jayati GHOSH

The idea is actually very simple, the idea of unitary taxation. Basically a multinational behaves like it's one company. It doesn't say, Oh, I am Google India and I am completely different from Google, Netherlands or Google Ireland. It behaves as Google. So we should actually tax them as one company.

 

TC 01:40:02

WAYNE SWAN

We should consider multinational companies as a whole. Look at the total profits they make and then seek to apportion those profits to the countries in which those profits were made.

 

TC 01:40:13

JAYATI GHOSH

Facebook, for example. It's getting, I think, 25% of revenues in India, but 2% of profits. So we say, well, wait a minute, you're getting this much revenue, we are employing so many people, we are going to charge you this much of your global profits.

 

TC 01:40:28

Narration

Oddly enough, this revolutionary system already exists at a national level…in the United States. There, companies are taxed at both the federal and state levels with tax rates varying widely from state to state.

From 12% in Iowa to 0% in the neighboring state of South Dakota.

But how can profits be taxed from a company that does business throughout the United States?

 

 TC 01:40:53

Joseph Stiglitz

 Within the United States, we have a lot of trade. What we did was move towards a formulaic system a long time ago. What a formulaic system just says is that we will look at where the workers are, where the capital is, where the sales are, and we'll apportion the profits that are generated by the corporation as a whole in line with those aspects of the company.

 

 

TC 01:41:27

Narration

Since its creation in 2015, the commission has been fighting to implement unitary taxation on a global scale.

 

Despite resistance from multinationals, they must convince world leaders that a fiscal reform is needed. But first, they must mobilize citizens.

 

TC 01:41:52

Narration  INDIA

The next stop on our trip in the universe of tax evasion is India, An attractive country for multinationals. Thanks to its 1.4 billion consumers, digital giants like Apple earn astronomical profits.

 

Unsurprisingly, they pay almost no tax there.

Taxing multinationals would go a long way towards addressing populations’ massive need for infrastructure, education and healthcare.

 

Jayati Ghosh is traveling across the country to expose the devastating effects of tax evasion and share the ideas of the commission.

 

TC 01:42:33

JAYATI GHOSH

Some of us definitely feel the need that it's very important to bring economics to ordinary people. That economic policies are too important to be left just to policy makers or those who are seen as technocrats.

 

TC 01:42:49

JAYATI GHOSH

We meet a very, very wide variety of people. I've been to farmers associations, I've been to civil rights organizations, I've been to NGOs that deal with the different kinds of citizens' demands. And yes, I find there's a lot of interest. I think also people are starved of knowledge about economic policy.

 

TC 01:43:13:

JAYATI GHOSH

Thank you very much, I’m very happy to be here. We have to create a situation where the government cannot respond only to cronies and to big corporations. It has to respond to the people, to the demands of the young, to the demands of ordinary people, to the demands of youth who insist that they have a right to employment. But we need to create a much larger public mobilization for it, all over India. These are things that can be done. The government doesn't have the political will. We have to force it to have that political will. Thank you.

 

TC 01:43:51

JAYATI GHOSH

Yes, I’ll make it in time

 

TC 01:44:12

JAYATI GHOSH OFF

Governments don't sort of turn good just because they suddenly, you know, see the light and decide to be nice. You know, governments do good things when they're forced to do good things, when public pressure makes them change.

 

TC 01:44:28

JAYATI GHOSH OFF

Profit shifting…It's obviously very strong in many different sectors, but it's really strong in digital companies because digital companies can provide services without even having a physical presence. You don't even need to have an office there. You can provide, a streaming service, you can provide software, you can provide other kinds of entertainment all digitally. And so who is going to tax you?

 

TC 01:44:55

Narration

To move forward, India, like many countries, decided to tax multinationals’ sales.

 For example, by creating a 6% tax on Google and Facebook’s advertising revenue in India.

 In retaliation, Washington significantly increased its customs duties on many Indian products.

 Is there a way to end this conflict?

Is there a way to tax multinationals properly?

 

TC 01:45:21

JAYATI GHOSH  (tribune 1)

There is a very very simple solution. Amazon, Google, any multinationals, they behave like one company. Treat them like one company.

 

TC 01:45:30

JAYATI GHOSH  (tribune 2)

The United States actually does this. They have unitary taxation of companies inside the US and it works.

 

TC 01:45:37

JAYATI GHOSH (INN)

So this was such a wonderful and simple and obvious solution. I was amazed that I hadn't thought of it. Wow. This is something that is so simple and easy and it will make such a massive and fundamental difference to all the tax revenues that get leaked out.

 

 TC 01:45:57:11

Narration

The Indian government spends barely 2% of its GDP on healthcare, which is one of the lowest budgets in the world.

 

Those who can’t afford the private sector often have to wait in line for days just to see a regular doctor.

 

The consequences of this two-tier system are tragic. The life expectancy of an untouchable is 15 years shorter than higher castes.

 

TC 01:46:21

JAYATI GHOSH (off )

Inequality is bad everywhere, and inequality creates unpleasant societies and injustice and all of that everywhere. But one of the problems the developing countries face is that the poor are really poor, and that's terrible because you have minimum things that you need for survival and the slightest increase in insecurity or the slightest change in your employment conditions is the difference between living and dying. It's a much more serious thing.

 

TC 01:46:

JAYATI GHOSH

Inequality in the developing world actually creates crimes against humanity. It actually means carnage. It means that, you know, large, poor people's populations are actually deprived of the minimum required for basic subsistence.

 

TC 01:47:14

JAYATI GHOSH WALKING

I was very fortunate because I grew up in a relatively privileged family. I happen to be upper caste. I realize how much that matters nowadays. We were both daughters. We never really felt we were different from boys. It is rare still in India, so I was always very fortunate.

 

TC 01:47:34

JAYATI GHOSH

It's much, much more difficult for most women to do the kinds of things I have been able to do. Many, many women have very significant difficulties in being in the public sphere at all.

 

TC 01:47:48    Narration

For Javati Ghosh, fighting for fiscal justice is inseparable from the fight for social justice and gender equality. A new generation of young researchers is determined to shine a light on the discrimination that women suffer on the job market.

 

TC 01:48:08

JAYATI GHOSH

Student  NANCY :

Textile industries: product of subcontracting is increasing.

 

TC 01:48:12

JAYATI GHOSH

 

You know, there are many more women in these factories. That's so large, I can't believe this.

 

TC 01:48:17

ETUDIANTE NANCY :

Yes, it is quite very large

 

TC 01:48:20

JAYATI GHOSH

It's a good little article to have because you know. People suspected, but we don't really have the numbers.

 

TC 01:48:25

ETUDIANTE NANCY :

Yes. Now it's coming out.

 

TC 01:48:29

JAYATI GHOSH

Yeah. Yeah. It's going to be a very interesting thesis.

 

TC 01:48:38

JAYATI GHOSH

At the moment, this country is going through such a terrible phase that the only thing that keeps me going are these young people. I am so impressed with our students. I really am full of amazement at their courage, their intelligence. I think that is the only thing that gives me hope actually.

 

TC 01:49:08  Narration

The hope of ambitious international tax reform remained a distant prospect. But in the decade from 2010, a growing number of scandals was about to shake up governments.

 

Chapitre 3  A DECADE OF SCANDALS

TC 01:49:27 Narration

The first scandal was in 2012 when it was discovered that the French

budget minister, in charge of taxes, was hiding his money in Switzerland.

 

 

 

TC 01:49:40

Président de l’Assemblée Nationale

La parole est au Ministre Jérôme Cahuzac

Minister Cahuzac, the floor is yours.

 

TC 01:49:43

Jérôme Cahuzac à l’assemblée nationale (2012)

Je n’ai pas, Monsieur le député, je n’ai jamais eu de compte à l’étranger…

Honorable member of parliament, I have never had accounts abroad.

 

TC 01:49:49

Jérôme Cahuzac devant la commission d’enquête (2013)

Je vous ai menti en vous répondant monsieur le député tout simplement parce que dans les heures qui précédaient j’avais menti au premier ministre et au président de la république.

I lied to you, honorable member, simply because in the hours before, I had lied to the PM and to the French president.

 

 

TC 01:49:57

Narration

In 2014, it was Luxembourg’s turn to be called out. Apple, IKEA, Pepsi, AXA… LuxLeaks revealed that over 340 multinationals had signed secret agreements to massively reduce their taxes.

 

 

 TC 01:50:13

DANIEL BERTOSSA

People were seeing that their politicians and their rich business friends were making enormous profits and not paying their fair share on that. And so the LuxLeaks and the Panama Papers, created a public awareness about what wasn't happening, about who wasn't paying their fair share.

 

TC 01:50:30

Narration

LuxLeaks, Offshore Leaks, Swiss Leaks, the Pandora Papers, the Panama Papers, these revelations were the turning point because they confirmed that tax evasion was massive and supported the positions defended by the commission.

 

 TC 01:50:50

WAYNE SWAN

What we've seen across the world in the last 30 years has been a war on taxation. But there's been a reaction and there is a different environment which can support the development of a stronger tax culture, not only nationally, but also internationally.

 

TC 01:51:11

Narration

Within the European Union, home to many tax havens, the resistance is growing. In early 2019, Eva Joly was on her way to the European parliament in Brussels.

 

 

 TC 01:51:25

EVA JOLY

C’est maintenant ma dixième année comme parlementaire et donc mon travail ces cinq dernières années a été dédié presque uniquement à démontrer combien le système actuel est malade, combien il est injuste et combien il est urgent de le modifier. 

 

This is my tenth year as MP, and my work the last five years has been dedicated almost exclusively to demonstrate how unhealthy and unfair the current system is, and how urgent it is to change it.

 

TC 01:51:45

Narration

She is there to inaugurate an exhibition on tax havens, including Luxembourg, one of Europe’s biggest tax havens alongside Ireland, Malta, Cyprus and the Netherlands.

 

 TC 01:51:57

EVA JOLY (Exposition tax Havens)

En fait, vous trouvez trois types de clients dans les paradis fiscaux. Ce sont des individus riches, ce sont les multinationales et ce sont les criminels. Ils se retrouvent là.

Actually, tax havens have three types of clients: rich people, multinationals and criminals. That's where they all meet.

 

TC 01:52:11

EVA JOLY

J'ai vu l'opinion des députés changer, au début, les conservateurs pensaient sans doute sincèrement, pour la plupart d'entre eux, que la compétition fiscale était un élément de la compétition. Mais avec nos commissions d'enquête, ils ont compris comme nous combien ce système est dommageable.

 

I have seen the opinion of MPs change. In the beginning, most conservatives genuinely thought that fiscal competition was just a part of competition. However, with our investigation commissions, they have come to understand, like we have, how damaging this system is.

 

TC 01:52:37

Narration

In the spring of 2019, the hope for tax reform of multinationals materialized for the first time.  In Strasbourg, the members of the European parliament prepared to vote on an ambitious report on tax evasion.

 

TC 01:52:51

EVA JOLY

C’est un très bon rapport qui reprend aussi les acquis Luxleaks et Panama Papers. Pour la première fois nous critiquons les Etats membres de l’Union qui ne jouent pas le jeu et qui ont une politique de défiscalisation agressive.

It's a good report, built on the findings of LuxLeaks and Panama Papers. For the first time, we criticise the EU member states who are not playing fairly and have an aggressive tax exemption policy.

 

TC 01:53:10

Narration

The text calls for the implementation of the unitary taxation of multinationals within the European Union. It reflects the willingness of the parliament to end the status quo.

 

 

TC 01:53:21

Président du parlement européen

Colleagues. We will now proceed with the report on financial crimes, tax evasion and tax avoidance.

 

TC 01:53:28

JEPPE KOFOD (rapporteur du rapport)

Tax evasion and avoidance. It costs about €1 trillion a year. It means €2,000 per citizen, European citizen per year.

 

TC 01:53:37

ALEX MAYER (S&D)

And it is a slap in the face for the people who pay their taxes day in, day out after they've gone to work.

 

TC 01:53:45

Narration

The text passed by a large majority.

The European Commission’s support to the text should help to implement it. This could be a blow to European tax havens like Luxembourg and Ireland, already in the crosshairs of Competition Commissioner Margrethe Vestager.

 

TC 01:54:07

Narration

When she joined the Commission in 2014, she started looking into Apple, the wealthiest multinational in the world, and its operations in Ireland.

 

TC 01:54:17

Margrethe VESTAGER

I am really passionate about tax justice. And if some companies can avoid paying taxes, while all the others will have to, this is simply not fair.

 

TC 01:54:31

Narration:

In 2016, the Commissioner asserted that Apple’s exorbitant tax benefits in Ireland constituted government aid from Ireland and therefore infringed competition regulations.

 

 TC 01:54:43

Margrethe VESTAGER  

The European Commission has today adopted a decision that Apple's tax benefits in Ireland are illegal. They allocated the profit between the Irish branch and the company's head office. The head office was subject to no tax in Ireland or elsewhere because this so-called head office only existed on paper. This was possible under Irish law, which until 2013 allowed for so-called stateless companies.

 

TC 01:55:24

Narration

A company without a tax address that earns profits everywhere but doesn’t pay taxes anywhere.

Multinationals dreamed of it. Ireland did it.

 

Seeing the enormous potential of phantom structures, Apple created several subsidiaries based on this model.

ASI, AOE and AOI are registered in both Ireland and Bermuda, a place in the middle of the Atlantic that doesn’t exist and where no tax can be collected.

 

Apple files the majority of profits generated outside the USA into the accounts of two phantom companies: ASI and AOE, who then transfer nearly all their worldwide profits to a third company: AOI.

 

This setup enables Apple to pay virtually no taxes outside of the United States.

 

In 2011, AOI’s combined profits were taxed at just 0.05 per cent, meaning almost a total tax exemption that shocks Europe and the USA.

 

 

TC 01:56:31

Narration:

Flanked by his lieutenants, Apple’s CEO Tim Cook was summoned to appear before the American Senate’s committee.

 

 TC 01:56:40

JOHN MCCAIN

Can you please state for the record where AOI, ASI and AOE has a tax residence?

 

TC 01:56:49

TIM COOK

Yes, Sir. My understanding is there's not a tax residence for either for any of the three subsidiaries that you just named.

 

TC 01:56:58

JOHN MCCAIN

Can you understand there's a perception of unfair advantage here? Mr. Cook?

 

TC 01:57:03

TIM COOK

Sir, I see this is a very complex topic. Honestly speaking, I don't see it as being unfair I'm not an unfair person.

 

TC 01:57:11

CARL LEVIN

About 70% of the profits worldwide now end up with those three Irish corporations in these companies that don't exist anywhere except on the water. And we got to understand what is going on. 

And what is going on is that three Apple employees decided where these profits are going to be taxed or non taxed. Folks, it's not right.

 

TC 01:57:37

Narration

In Europe, Margrethe Vestager called for the American giant Apple to pay 13 billion euros for unfair competition.

 

TC 01:57:47

Margrethe VESTAGER

The 13 billion euros that we asked Apple to pay back to the Irish state was in our view the taxes that they had not paid.

 

 TC 01:57:58

Narration:

But in 2020, Apple and Ireland challenged the decision in the European court of justice, who overturned the ruling. For Margrethe Vestager it was a major disappointment.

 

 

TC 01:58:10

Margrethe VESTAGER

We lost the first court case and I can tell you there is a difference between knowing that you can lose a case and actually doing it. It is not very nice.

 

TC 01:58:25

Narration

Eva Joly also experienced a rude awakening. The text on tax evasion voted for by almost 90% of the European parliament was sidelined. Torpedoed by the European Commission chaired by former Luxembourg Prime Minister Jean Claude Juncker.

 

 

TC 01:58:40

EVA JOLY

C’est avec stupéfaction que j’ai appris que la commission baissait les bras. Je sais bien qu'au sein de cette commission il y avait de la résistance mais je sais aussi qu’ils n'ont pas vraiment essayé. Et c’est ça qui n’est pas pardonnable.

I was dumbfounded to learn that the commission was giving up. I know there was resistance inside the commission. But I also know that they didn't really try. And that is unforgivable.

 

TC 01:59:05

EVA JOLY

Dans quelques semaines je quitterai mes fonctions de députée européenne (chuchoté)

In a few weeks, I will leave my job as a member of the European Parliament ...

(whispering)

 

TC 01:59:13

Dans quelques semaines je quitterai mes fonctions de députée européenne après dix années de combat contre la corruption et pour la justice fiscale.

In a few weeks, I will leave my job as a member of the European Parliament after ten years fighting corruption and for fiscal justice.

 

TC 01:59:21

Ma satisfaction c’est de voir qu’après dix ans, les demandes pour plus de transparence et de coopération fiscale sont de plus en plus partagées dans cet hémicycle.

Mon amertume, elle vient du manque de volonté politique pour transformer les idées en action.

 

I am happy to see that after ten years, calls for more transparency and tax cooperation are increasingly shared in this chamber. My bitterness comes from the lack of political will to turn ideas into action.

 

TC 01:59:46

Narration

At the OECD, negotiations on taxation of multinationals have stalled.

In the absence of an agreement, some governments decided unilaterally to tax the digital giants.

And it’s Paris who led the way in 2019 by adopting a 3% tax on their French revenue.

  

 TC 02:00:04

JOSEPH STIGLITZ

Many of the European countries said the American digital giants were robbing us of revenues and we have to tax them. And America responded by saying, if you tax them, we'll tax your wine. And it became an old style fight.

 

 

TC 02:00:28

DONALD TRUMP

So France put on a tax on our companies. You know that and. Wrong, wrong thing to do.

And I told them, I said Don’t do it, because if you do it, I am going to tax your wine.

I have always liked American wines better than French wines.

Even if I don't drink wine. I just like the way they look.

 

TC 02:00:50

BRUNO LEMAIRE

Nous appliquerons quoiqu’il arrive une taxation aux géants du digital en 2020 parce que c‘est une question de justice. Et, je veux dire à nos amis américains que nous ne serons pas les seuls à le faire.

Whatever happens, we will impose a tax on digital giants in 2020. It's a matter of justice. And I will say to our American friends that we will not be the only ones to do so.

 

TC 02:01:00

Pascal SAINT- AMANS

Les pays européens notamment, mais aussi l'Inde ou l'Afrique du Sud et quelques autres, ont décidé qu'en l'absence d'accord mondial ils allaient prendre des mesures unilatérales. Des taxes sur les services numériques et les entreprises, les grandes entreprises américaines notamment, se sont dit ces mesures unilatérales, ce n'est pas bon, ça va nous coûter beaucoup plus cher qu'un accord multilatéral et donc elles se sont mises à soutenir un accord multilatéral.

European countries, but also India, South Africa and others have decided, in the absence of a global agreement, to act unilaterally and tax digital services. And the large companies, US companies in particular, realised that unilateral measures would cost a lot more, so they began supporting a multilateral agreement.

 

TC 02:01:28

Narration

In 2019, tensions surrounding the taxation of multinationals escalated. Even multinationals were no longer clinging to the old tax system. It was time to reinvent global taxation.

 

CHAPITRE 4 : THE VICTORY OF IDEAS

 

 

TC 02:01:50

In 2020, negotiations on the taxation of multinational corporations accelerated. The commission sees this as an opportunity to promote a second idea that went beyond unitary taxation. An idea as simple as it is effective: the creation of a global minimum tax.

 

 

 TC 02:02:09

Gabriel ZUCMAN

Ça, c'est révolutionnaire parce que c'est effectivement un changement profond dans le mode de régulation de la mondialisation. Ce que ça va changer, c'est que ça ne va plus être possible pour des entreprises d'enregistrer des milliards de bénéfices aux Bermudes, taxés à 0 %. Tous les taux d’imposition ne sont pas acceptables : 0%...pour les profits aux Bermudes ? Non, C’est trop faible !

That's revolutionary. It represents a profound change in the way we regulate globalization. Companies will no longer be able to book billions of profits in Bermuda at zero tax. Not all tax rates are acceptable: Zero per cent for profits in Bermuda? That's too low!

 

TC 02:02:31

JOSEPH STIGLITZ

You need to have rules of the game and the minimum tax is a rule it says tax competition actually doesn't work.

 

 

TC 02:02:42

Narration

Irene Ovonji-Odida is one of the commission’s African voices. A lawyer and human rights activist from Uganda, she has been denouncing tax evasion and the looting of the African continent’s resources for years.

 

At the end of 2019, she represented the commission for fiscal justice at the OECD, promoting minimum taxation and unitary taxation, while opposing the multinationals’ lobbyists.

 

 IRENE OVONJI ODIDA INN

I look at this issue of tax justice as the civil rights issue for our generation,, that is how I see it, because I see how the rights of society, of citizens are so tied up with this economic issue.

 

TC 02:03:31

IRENE OVONJI ODIDA  OFF

Probably what we need to do is to recognize that this is a marathon and that there will be steps. But I am an optimist. And I’d like to believe that there always is progress and some of those steps are beginning to happen

 

TC 02:03:45

Narration

The OECD member countries are now advocating for a global minimum tax on the profits of multinationals. They just have to agree on a rate that will ensure a broad agreement. In order to convince the most reluctant countries, France proposed a particularly modest rate.

 

 

 TC 02:04:02

BRUNO LEMAIRE

S’agissant du taux, nous proposons comme point de référence 12,5%. Comme taux minimum d’imposition sur les sociétés, il nous semble qu’un taux de 12,5% comme imposition minimale sur le taux d’impôt sur les sociétés est un bon point de départ et une bonne référence.

When it comes to the rate, we propose 12.5 % as a minimum corporate tax rate. We believe that a minimum of 12.5% tax rate on companies is a good starting point and a good point of reference.

 

TC 02:04:24

Irene OVONJI ODIDA  INN

The minimum tax that was proposed was very low, similar to the rate you have in tax havens like Ireland, which are 12,5%. So not a good, not a good number at all. And we proposed that the tax should be at least 25%. And that was kind of looking at an average between the kind of minimum tax on corporations of advanced economies and the developing countries.

 

 

TC 02:04:50

Narration

For the commission, a tax rate as low as 12.5 per cent is unacceptable. But how can they convince member states to agree to a higher rate?

 

The commission’s members prepare arguments for the OECD.

 

 

 TC 02:05:04

Magdalena Sepúlveda

We're going to provide a tool for them to negotiate. So if we're going to provide a tool for them to negotiate, we have to go high because they're going to adopt a lower standard.

 

TC 02:05:14

Jayati GHOSH

We believe that a minimum rate of around 25% is a reasonable rate.

 

TC 02:05:19

Jayati GHOSH

It's a bargaining position: if you say 15, you'll get 12.

 

TC 02:05:23

JOSEPH STIGLITZ

And it means that multinationals are getting away with lower rates than domestic firms who are actually paying a much higher effective tax rate.

 

TC 02:05:32

Thomas PIKETTY

I mean this is not our job to say  Ireland is the new norm.

 

TC 02:05:38

Jayati GHOSH

So say 25. I mean, it's a bargaining position.

 

TC 02:05:51

Pascal SAINT AMANS

En 2020 lorsqu‘on s’apprêtait à conclure les négociations, le covid arrive et a rendu les choses beaucoup plus compliquées. D’abord parce que les politiques, les ministres des finances, les chefs d’Etats et de gouvernements avaient une urgence absolue à traiter qui était le covid et puis qu’on a cessé de négocier en physique.

 

In 2020, as negotiations were coming to an end, Covid came and made things a lot more difficult. Politicians, finance ministers and heads of state had an emergency to deal with. And we stopped to negotiate in-person.

 

TC 02:06:10

Narration

The pandemic caused the death of over 7 million people around the world.

 

In India, crematoriums operated day and night.

A shortage of hospital beds, oxygen and medical staff caused healthcare systems all over the world to collapse.

 

 TC 02:06:33

Magdalena Sepúlveda

El Covid ha sido una tragedia enorme para muchos países, crea una aumento enorme de la pobreza, pero al mismo tiempo, ha hecho entender a las familias de muchos países del mundo, que es necesario tener un sistema público, que es importante poder acceder a la salud sin que dependa de tu capacidad de pago.

Covid was a huge tragedy for many countries with a major increase in poverty. But at the same time it made families around the world understand - the importance of public services and access to health care, regardless of your ability to pay.

 

TC 02:06:59

Narration

Covid paralyzed entire economic sectors, forcing governments to massively subsidize their citizens, their companies and their healthcare systems.

According to the International Monetary Fund, G20 countries spent over 11 trillion dollars to cope with the pandemic.

Meanwhile, multinationals have continued to enjoy record-breaking profits and avoid taxes.

Tax reform has become inevitable

 

TC 02:07:31

Narration

Joe Biden’s arrival in the White House during the pandemic is about to shake things up.

 

 

 TC 02:07:38

Gabriel ZUCMAN (archive)

Pour la première fois en mars avril 2021, on a entendu au plus haut niveau de l’exécutif américain donc Janet Yellen, la secrétaire au Trésor américain, dire écoutez nous maintenant on n’accepte plus la concurrence fiscale. On va changer les règles du jeu.

For the first time, in March-April 2021, we heard a top US government official, Treasury Secretary Janet Yellen, say: "We no longer accept tax competition. We will change the rules of the game."

 

 

TC 02:07:56

JANET YELLEN

We are working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom.

 

TC 02:08:06

Gabriel ZUCMAN

Le projet de Janet Yellen, c’est un taux de 21%. 25 ce serait mieux. Mais enfin 21 c’est pas très loin. Et, donc l’idée c’est que si une société américaine enregistre des profits, je ne sais pas. En Irlande, ils sont taxés à 5 %. En Irlande, les États-Unis vont prélever les 16 % manquants pour arriver à 21 %. Et il y avait déjà un embryon de discussion à l'OCDE sur ces questions d'impôt minimum. Mais les taux qui étaient discutés, c'était autour de 12 %. Et là, les Etats Unis, quand ils disent non mais nous, on veut 21 %. Comprenez bien que c'est très différent.

Janet Yellen proposed a 21% tax rate. 25 would be better. But 21 is not bad. So the idea is that if a US company registers its profits in Ireland at a 5 % tax rate, the US would tax them another 16 % to reach 21 %. They were already beginning to discuss a minimum tax at the OECD, but the rates discussed were around 12 %. And the US said: "No, we want 21 %." That's very different.

 

TC 02:08:36

Narration

The White House initiative gave a powerful boost to the negotiations.

In the face-off between governments and multinationals, a government victory is now within reach.

 

 TC 02:08:50

Jayati GHOSH + Irene OVONJI ODIDA

- Who would have thought  in one year ?

TC 02:08:52

- Yeah

 

TC 02:08:54

- You would have had such a difference ?

TC 02:08:55

- Yes.

 

TC 02:08:56

- Even in terms of  the openness of the OECD to certain ideas that were just rejected across the table.

TC 02:09:01

- Yes. Yes. And the fact that these issues are on you know, on on the on the table is really important.

 

TC 02:09:07

Narration

After 9 years of negotiations, 136 countries finally came to a historic agreement. It was officially announced during the Rome G20 summit in 2021.

It took a century to reform a system established in the 1920s. 

Although many developing countries would have preferred a more ambitious agreement, there is now a new hope for a fair world.

 

 TC 02:09:31

MARIO DRAGHI  Premier Ministre -  Italie

È stato riformato il sistema di tassazione internazionale per garantire che tutte le società paghino la loro giusta quota di tasse.

 

The international tax system has been reformed to ensure that all companies pay their fair share of taxes.

 

 

TC 02:09:40

PASCAL SAINT-AMANS

Le 8 octobre 2021, je pense que c'est historique. Ça permettait de tourner une page, de tourner une page d'une fiscalité internationale dépassée et d'aller dans un monde où il y aura plus de justice fiscale. C'est l'aboutissement de quinze ans de travail extrêmement ardu, stressant.  On n'était pas du tout sûr d'avoir un accord.

L'Irlande s'est décidée la veille et l'Arabie saoudite s'est décidée à midi dans les dernières heures avant l'accord.

8 October 2021, I think it was historic. We could move on from an outdated international tax system towards a world with greater tax justice, after 15 years of hard, stressful work. We were not sure we would reach an agreement.

Ireland agreed the day before, and Saudi Arabia agreed at noon, in the last hours before the agreement was signed.

 

TC 02:10:06

Narration

The progress made since the beginning of the negotiations is spectacular. The agreement signed by 136 countries is founded on 2 pillars.

Pillar one is the unitary taxation of multinationals. Pillar two is global minimum tax.

 

For the commission for fiscal justice and its allies, it's a stunning victory.

 

 TC 02:10:29

Gabriel ZUCMAN

Quand vous teniez ce discours, ne serait encore qu’en 2016, en 2017, tout le monde vous répondait mais c’est absurde. Jamais il n’y aura un accord où vous aurez l’Irlande, les Bermudes, les Etats-unis, la Chine, l’Inde qui accepteront d’avoir un taux minimum. C’est une vue de l’esprit. Il y a encore cinq ans, on était quelques uns dans nos réunions à défendre cette idée, à dire il faut écrire des rapports, à les expliquer aux journalistes mais personne d’autre n’y croyait. Ou presque.

If you spoke about this as late as in 2016-2017, everyone would say it is absurd. There will never be an agreement where Ireland, Bermuda, the US, China and India agree to a minimum tax rate. It's wishful thinking. Literally, five years ago we were a handful of people defending this idea, saying: We should write reports, talk to journalists. But hardly anyone else believed in it.

 

 

TC 02:11:04

Magdalena Sepúlveda

In 2015, nobody thought that a minimum tax rate could be imposed. So it is it is a crack in the system. And I think that we have to feel very proud that the crack is there and and it has opened now.

 

TC 02:11:17

IRENE OVONJI ODIDA

So issues that before were looked at as fringe issues, you know, a bunch of crazy leftist, dreamers, are now mainstream issues, you know, for example, the idea that you can tax corporations as unitary entities.

 

TC 02:11:37 Narration

Pillar one is Unitary taxation, which eliminates borders by taxing the total profits generated by all of a multinational’s subsidiaries.

Unfortunately, the current agreement only applies to about 100 of the largest and most profitable multinationals.

Another disappointment for the commission is that only a fraction of the multinationals’ profits, say, the tip of the iceberg, is targeted by the new tax. Nonetheless, if ratified, it should generate 30 billion dollars per year in taxes worldwide, which will then be redistributed proportionately to each country.

 

TC 02:12:16

Narration

Pillar two of the agreement is the global minimum tax. The European Union began applying it in 2024.

From now on, profits of European multinationals will be taxed at at least 15% no matter where they’re registered.

A French multinational whose profits are located in Bermuda where they’re taxed at 0% will have to pay the full 15% to the French treasury.

In other words, multinationals will no longer have any incentive to offshore their profits to tax havens.

 

 TC 02:12:53

Gabriel ZUCMAN

C’est un changement conceptuel, philosophique, important. C’est un changement qui va avoir des traductions budgétaires et fiscales notables. L’OCDE estime que cette taxation minimale va rapporter de l’ordre de 200 milliards de dollars de recettes fiscales supplémentaires au niveau mondial.

 

It's a major conceptual, philosophical change that will have significant budgetary and fiscal implications. The OECD estimates that this minimum tax will bring in USD 200 billion additional tax revenue worldwide.

 

 

TC 02:13:12

Narration

200 billion dollars. This estimate is based on a worldwide tax rate of 15%. A far cry from the 21% Joe Biden wanted and the commission’s 25%.

 

 

 TC 02:13:25

JOSEPH STIGLITZ

We advocated it should be 25%. They chose 15%. And we worry that this minimum will become the maximum.

 

TC 02:13:35

SUSANA RUIZ RODRIGUEZ

En realidad este acuerdo es una mala noticia para los paraísos fiscales más agresivos, los del 0%. Es decir, va casi van a desaparecer el funcionamiento de esos súper paraísos fiscales donde no se paga prácticamente nada, pero es en realidad lo que estamos. Es simplemente elevando el listón hasta un 15%, que es más o menos los niveles de países como Irlanda o como Singapur o como Suiza,

 

In fact, this agreement attacks the most aggressive tax havens, which tax at 0%. It will virtually wipe out those super tax havens where you pay virtually nothing, but it only raises the rate to 15% which is more or less the levels of countries like Ireland, Singapore or Switzerland.

 

 

TC 02:14:00

DANIEL BERTOSSA

Whilst 15% is better than the race to zero. It must only be the first step. When a nurse or a doctor working a night shift in a hospital risking their life on a COVID ward is getting taxed for that work at 20 and 30 and in some countries 40%, yet the largest corporations on the planet are only now being asked to pay 15% and with a series of loopholes, It's completely unjustifiable.

 

TC 02:14:30

Narration

To get around the new rules, multinationals will continue to use the same armies of tax attorneys who helped them avoid taxes for decades.

These tax optimization experts, who are paid millions to help governments lose billions, work in the City, London’s Financial district.

 

 

 TC 02:14:49

ALEX COBHAM Tax Justice Network

So these big glass buildings behind us. Right. You know, the Shard and so on. We find office after office full of accountants and lawyers and other sorts of tax advisors and bankers, all of the people who put in place the schemes and the laws to make them work in jurisdictions all around the world, so that a group of people who've already got more money than the rest of us can rip everyone off. The enablers are at the heart of this problem and they're at the heart of the City of London.

 

TC 02:15:21

GABRIEL ZUCMAN

L'Industrie de l'optimisation fiscale, c'est les cabinets d'audit et de conseil. Les Big Four sont les plus célèbres et ils aident les entreprises multinationales à comment dire manipuler les comptes des entreprises de façon à maximiser ce qui est enregistré en termes de profits au Luxembourg ou en Irlande ou aux Bermudes, et à minimiser ce qui va être enregistré aux États-Unis, au Brésil ou en Allemagne.

Cette industrie-là emploie des dizaines de milliers de personnes. Même Plus de 100 000 personnes à l'échelle mondiale. Et c'est comme ça qu'on se retrouve dans la situation actuelle où 40 ?s bénéfices multinationaux sont enregistrés dans les paradis fiscaux.

 

The industry of tax optimization is dominated by accounting and consulting firms. The Big Four are the most famous. They help multinationals manipulate accounts to maximize profits registered in Luxembourg, Ireland, or Bermuda and minimize profits registered in the US, Brazil, or Germany. This industry employs tens of thousands of people, even more than 100,000 people worldwide. And that is why we are in the current situation where  40% of multinationals' profits are booked in tax havens.

 

 

TC 02:16:00

ALEX COBHAM

Our estimate, which is deliberately conservative, is that that costs the world something like$483 billion a year in lost revenues. Call it half a trillion.and that translates directly into losses in terms of child mortality, maternal mortality and the inability to respond to the pandemic.So death and taxes, you know, people say are both certain. Actually, it's the tax abuse that makes death unnecessary death, certain.

 

TC 02:16:34

Narration

Tax evasion is deadly, even more so in developing countries. Until now, they have been mostly neglected by the reform adopted in 2021. A situation the commission finds intolerable.

 

CHAPITRE 5 : A NEW FRONT

 

TC 02:16:53

JAYATI GHOSH

This is a process that was started by the OECD by the club of developed countries, and developing countries have basically been allowed into the room, not really sitting at the table writing, but just present in the room. And so we're stuck with this where the only real international process is one that is driven by the OECD countries who persist in making themselves the high table with their own little secret dealings, and everybody else gets the crumbs that fall off that table.

 

 

TC 02:17:22

Narration

The OECD, who invited developing countries to the negotiating table, claims the process is inclusive.

 

 

 TC 02:17:30

PASCAL SAINT- AMANS

Inclusif, c'est un mot un peu passe partout aujourd'hui, mais franchement, 158 pays membres sur un pied d'égalité avec, je crois, un vrai respect des uns et des autres. C'est quelque chose qui a changé la dynamique de la coopération fiscale

Inclusivity is a buzzword today, but frankly, having 158 member countries on equal footing and respecting each other is something that has changed the dynamics of tax cooperation.

 

TC 02:17:46

IRENE OVONJI ODIDA

The process was managed really badly by the OECD Secretariat in a way that was very unfair, and sometimes the discussions would produce huge papers. The documents would come out with very little notice, at very short time. You could you could have something like a 800 page document and maybe just a couple of days or a day to read it, not enough time.

So that kind of process was really not a good process at all, which is why I cannot call it an inclusive process, regardless of the name.

 

TC 02:18:16

JOSE ANTONIO OCAMPO

Muchos gobiernos de países desarrollados le dan mucha importancia a lo que quieren las empresas multinacionales y los magnates.

 

Many governments of developed countries give a lot of importance to what multinational companies and tycoons want.

 

 

TC 02:18:26

Narration

José Antonio Ocampo is a Colombian economist. He is one of the commission’s founding members and its former chairman. He is also a former minister of finance in Colombia.

 

 

TC 02:18:36

JOSE ANTONIO OCAMPO

Todos los estudios que se han hecho muestran que el grueso de los beneficios, yo diría el 90%, 85%, es para países desarrollados. O sea, lo que obtuvimos los países en desarrollo fue muy poco.

 

All the studies that have been made show that the bulk of the benefits, I would say 90%, 85%, went to developed countries. In other words, what we developing countries got was very little.

 

 

TC 02:18:52  Narration

The dark side of the agreement is that it doesn’t target multinationals’ looting of natural resources in developing countries. Southern countries are mobilizing to fight back.

 

 TC 02:19:11

IRENE OVONJI ODIDA off

In the past fifteen years or so, there is a lot more recognition of how taxes and taxing rights are really central to development. So taxes and taxing rights seems to be the divider between countries that can develop and those that cannot.

 

TC 02:19:38   ZAMBIA

Narration

The last stop on this journey though the galaxy of tax evasion: Zambia, a country with an immense wealth of natural resources. Gold and more importantly copper abound in its soils. And yet, its people have benefitted little from this abundance. Zambia is actually one of the poorest countries in the world.

 

 

 TC 02:20:00

IRENE OVONJI ODIDA

One of the issues for African countries and other developing countries is that they have major resources, natural resources, could be minerals and other agriculture products and many others but then lack capital and lack the technology to exploit those resources. On the other side you have multinational corporations which are looking for resources for their operations for profits.

This era which is said to be part of the Luba kingdom was one of the oldest mining communities in Africa apparently. So the ancestors of these people in Solwezi were involved in copper mining long before colonialism.

 

TC 02:20:56

Narration

The Kansanshi copper mine is the second largest in the country stretching over 200 square kilometers. The site is operated by the Canadian multinational First Quantum Minerals. Who extract over 250,000 tons of copper per year. The revenue generated is enormous. Yet the locals don’t reap much of the benefits.

 

 

 TC 02:21:26

IRENE OVONJI ODIDA

The community has has moved, I think a couple of times, some of them more than once. Some have been shifted a distance away, maybe 45 to 100 kilometers to other communities. And in some cases, the new areas where they're settled do not have the same land area as they had before. There is a disruption around water access. So because some of the previous water sources, like streams are now within the compound of the mine.

 

TC 02:21:54

Narration

According to an official representing the Kansanshi mining project, up to 1,500 tons of acid are required each day in order to extract and refine the copper.

 

 

 TC 02:22:05

JUSTINA KABESHA 

The water we used to drink before the mine came was good water.  Now after being displaced by the mine to come here at Kabwela area,  we are not drinking good water.  We are drinking water with a lot of acid.  why we are saying so is that when you draw water in the buckets, the following morning water looks like coffee. This same water has brought us different illnesses.  We experience stomach pains all the time.  Diseases are many. The water is very bad.

 

TC 02:22:46

IRENE OVONJI ODIDA

The low taxation rights that a country may have in developing countries like in Africa has a broad impact on the majority of citizens, but has an impact more on the women, because traditionally it'll be the women who provide food. And so they do certain things like maybe clean the house, wash the clothes, which needs water. So if it isn't water, they have to walk a long distance to go and collect water.

 

 

TC 02:23:21

Narration

The only source of drinking water is a two-hour walk from the village.

 

 

TC 02:23:58

Today, Zambia is the seventh largest producer of copper in the world. But mining companies here like elsewhere, exploit the complexity of tax regulations to avoid taxes.

 

 TC 02:24:20

ANDREW ITAI CHIKOWORE  ActionAid

In the Kansanshi mine, what is known is that the Canadians own 80% of the shareholding

and the government owns the rest.

But because the company has repeatedly reported losses, this has resulted in the government being forced to sell its shares to the company in an effort to get some royalties out of it.

So this is an explicit case of the extent to which companies continue to report losses.

 

TC 02:24:55

Narration

According to Oxfam, the tax evasion of mining companies costs the Zambian government half a billion dollars each year - the equivalent of 15% of the country’s tax revenue.

In Lusaka, the country’s capital, a modest tax office is trying to untangle the mining companies’ practices of tax avoidance.

 

 

 TC 02:25:19

Chilala Hakayma  

Assistant Director Investigations at Zambia Revenue Authority (ZRA)

In Zambia principally, mining industries are big contributors to the government Treasury. So they take advantage of that because here they know we depend on them. They are our biggest payers in some taxes. As a result, in some way someone  will think they are treated with this kindness  and then they take advantage of that kindness and do wrong things because they know they are big. And they think they run the economy.

 

TC 02:25:55

Narration

Faced with the sophisticated tax avoidance practices of large mining companies, investigators can only go after smaller companies.

 

 

 TC 02:26:07

Chilala Hakayma

Any case that relates to the mine that we are working on ?

 

TC 02:26:09

Thomas Kalaluka

Assistant Director Investigations ay Zambia Revenue Authority (ZRA)

About cases relating to the mine, one, we had an interview with the owners of their mines, so they were getting revenues and externalizing them out of the country through their personal accounts domiciled elsewhere.

 

TC 02:26:25

Chilala Hakayma

We've got so many cases, more than a 1,000 cases So we don't have sufficient numbers to conduct our investigations efficiently: we have 15 officers. It does not make sense when companies open a mine and pay tax elsewhere leaving the poor Zambian suffering in the streets. It's really not supposed to be like that.

 

TC 02:26:59

Narration

With the rise of electric vehicles and wind turbines, the need for copper will increase exponentially in the coming years.

It’s an opportunity for Zambia to become one of the winners in the energy transition.

 

But only if a new international agreement forces multinationals to pay their fair share.

 

 

 TC 02:27:27

ITW Mukupa Nsenduluka Tax Justice Network Africa

I think now more than ever with this energy transition and with the demand that it will come when Africa's resources, we need to see more coordination amongst the African states when it comes to tax policy and regional integration and the more coordinated and integrated and united we are as a continent, we can then stand up to the global North.

 

TC 02:27:49

IRENE OVONJI ODIDA

The development of norms for global taxation has been done by OECD for 70 years. And in the course of that, it has privileged or prioritized the interests of its members and especially its bigger members. So countries that are not part of that have lost out in terms of taxing rights

 

TC 02:28:11

IRENE OVONJI ODIDA  off en voiture

And so there's been a call for the UN to be the forum where rules for global taxation and also global finance should be set.

 

TC 02:28:21

IRENE OVONJI ODIDA off image ONU

There was a resolution presented by the african group in New-York, led by Nigeria, calling on the UN to negotiate a UN Tax Convention.

 

TC 02:28:29

NIGERIA

Nigeria is happy to be taking this historic first step. International tax cooperation should be universal.

 

TC 02:28:36

SOUTH AFRICA

South Africa supports the resolution tabled by Nigeria.

 

TC 02:28:40

ERITREA

The resolution aims to ensure cooperation  among all member States to establish one coherent global system designed to work for all countries, and not just a few.

 

TC 02:28:49

IRENE OVONJI ODIDA off puis in

The OECD was quite involved in trying to mobilize OECD members to oppose it. There was a lot of pressure  from big countries. U.S.A. and also other countries, Switzerland, countries like that.

 

TC 02:29:03

USA

We desagree with the notions implied by this resolution….

 

TC 02:29:05

Narration

Despite opposition from several OECD member countries, the resolution was finally adopted.

 

 

 TC 02:29:10

CHAIR

Draft resolution L11 rev 1 is adopted.

 

TC 02:29:16

Narration

The UN is likely to take on the battle for taxation of multinationals. It’s an important victory for developing countries but it will remain purely symbolic if the United Nations does not take the necessary steps towards a new agreement.

29:34

It’s also a victory for the members of the commission who are determined to pursue the fight for tax justice. They have a new priority: ensuring that the wealthiest individuals also pay their fair share.

 

TC 02:29:50

Magdalena Sepúlveda

Los Super ricos chilenos también se hicieron mucho más ricos. Entonces es ahora el momento de decir: tengamos impuestos progresivos.

Super rich Chileans have also gotten a lot richer. So now is the time to say: we need progressive taxes.

 

TC 02:29:59

Jayati GHOSH

Now we have got unbelievable levels of inequality. The richest 1% of our population has tripled its income.

 

TC 02:30:07

Gabriel ZUCMAN

Concrètement ce qu'on a fait pour les multinationales. Il faut qu'on arrive à le faire pour les très grandes fortunes mondiales qui arrivent à complètement éviter l’impôt sur le revenu. Jeff Bezos, un certain nombre d'années, payait zéro impôt sur le revenu, même à un moment, a reçu un chèque du Trésor américain pour toucher des allocations familiales qui normalement sont réservées aux classes moyennes parce qu'il  avait zéro revenu fiscal.

 

What we have done for multinationals, we need to do for the world's wealthiest who manage to completely avoid income taxes. Jeff Bezos paid zero income tax for a number of years. He even got family allowances from the US Treasury, normally reserved for the middle class, because he had zero taxable income.

 

TC 02:30:30:

JOSEPH STIGLITZ

I have a very good feeling about the awareness within the general public and I am very optimistic that this awareness will get translated into action.

 

TC 02:30:44

THOMAS PIKETTY

Je veux insister sur un message optimiste. Ce combat, non seulement il peut être gagné, mais il a été gagné historiquement. Il y a une marche vers l'égalité depuis la fin du XVIIIe siècle, qui continue au XIXe siècle, au XXe siècle et qui, je pense, va continuer au XXIᵉ siècle. En pratique, ça passe souvent par des moments de crise, par des très fortes mobilisations. C'est comme ça que les choses se sont faites au cours des deux derniers siècles. On a toutes les raisons de penser que ça va, ça va, continuer dans cette direction.

 

I want to emphasize an optimistic message.This fight can be won and has been won, historically speaking. We have seen a movement towards more equality in the past three centuries which I think will continue in the 21st century. It often goes through moments of crisis and strong mobilisations. That's how it has been in the past two centuries, and we have every reason to believe it will continue that way.

 

 

TC 02:31:21

ALEX COBHAM(chief executive) Tax Justice Network

The dilemma we have, you know, for this Century, really is this: either we can keep being afraid and keep refusing to defend progressive taxation as a way to make our societies better and in doing so, pretty much condemn ourselves to kill the planet that we live on, as well as each of the societies that we live in.  Or we can find some politicians and some public demand to say, yeah you don't like  paying taxes, I don't like paying taxes. But you know what ? We all live better lives when we have better taxes.

 

 

END CREDITS