Global church bodies have joined in calling for reform of the global tax system, saying tax systems have a “pivotal” role to play in financing the recovery from the COVID-19 pandemic.
In a letter addressed to G20 finance ministers ahead of a meeting in Venice, Italy, on 9th July, the World Council of Churches, World Communion of Reformed Churches, Lutheran World Federation, World Methodist Council and Council for World Mission, noted that while rich countries have spent 35.6 per cent of their GDPs on responding to the health emergency and supporting employment and businesses, low income countries have only been able to spend six per cent of their GDPs on fighting the pandemic “and are even now struggling to meet the demands of protecting their citizens”.
“As the most sustainable source of revenue, tax systems have a pivotal role to play in bolstering social sector initiatives and financing the recovery from the crisis,” they wrote. “No doubt the impact of the crisis on many countries’ fiscal health will be significant and long-lasting but robust and transparent tax systems offer a pathway out of deficit and debt to a more equitable and sustainable future.”
Italian Foreign minister Luigi Di Maio attends the G20 of foreign and development ministers meeting in the southern Italian city of Matera, Italy, on 29th June. PICTURE: ANSA/Angelo Carconi/Handout via Reuters/File photo.
In the letter, the church organisations acknowledged recent efforts to reform tax systems, including the G7 proposal for a 15 per cent global corporate minimum tax. But it described the proposal as “underwhelming” and said “much more must be done”.
“Representing more than half a billion Christians worldwide, our organisations…believe that it has never been more urgent and necessary to fix our broken global tax system.”
The organisations said the “endemic injustices” of global poverty, racial inequity, health inequality and climate change are “rooted in the legacies of colonial exploitation and resource extraction, and call for systemic change.”
“Our organisations view the system-wide overhaul of the tax architecture as an indispensable element in resourcing reparation and restoration.”
They added that “tax justice” is “at the heart” of any post-COVID-19 recovery plan as well as being “crucial for mitigating widening inequality and stepping up to the challenges posed by a rapidly warming climate”.
Specifically, the letter – in line with the ecumenical Zacchaeus Tax campaign – calls for the enactment of progressive wealth taxes at global and national levels to curb the growing concentration of wealth, an end to tax evasion and tax avoidance by multi-national companies and affluent individuals and a ‘COVID-19 windfall tax’ or ‘excess profit tax’ on the super-wealthy, equity and hedge funds, and multinational, e-commerce, and digital corporations that have been “realising even greater returns during pandemic times”.
“Those that are benefitting from the crisis ought to shoulder the bulk of the financial burden to pay for the recovery,” they write.
The letter also calls for carbon and pollution taxes “to restrain harmful emissions and raise revenues for investment in renewable energy as well as for meeting the costs of climate change mitigation and adaptation and reparations for climate-related loss and damage in income-poor and vulnerable countries”. The bodies also want the implementation of a financial transaction tax on trade in equities, bonds, currencies and derivatives to curb harmful speculative activities “with proceeds to be allocated towards global public goods and the protection of our ecosystems, as well as towards reparations for slavery and other historical injustices”.
