13 November 2014
When the G20 leaders gather in Brisbane this weekend for their annual meeting they have a choice. They can either take action by tackling corporate tax dodging to ensure that governments in Africa and elsewhere can raise the money to properly fund public services including health care, or they can all but guarantee that the current Ebola crisis will not be the last of its kind.
The impact of Ebola
For those of us living in Liberia, Sierra Leone, or Guinea, these are hard days. More than 13,000 people have been affected across the region, of whom some 5,000 have died, making this the worst disaster we have seen in the region since war ended more than 10 years ago. At ActionAid Liberia we are working hard to help stop the virus spreading and supporting those already affected.
One infuriating aspect of the epidemic is that it was at least partially preventable. If Liberia had a stronger health care system in place, a lot more could have been done to control the spread of the disease. Prior to the current outbreak, Liberia, Sierra Leone and Guinea had an average of one hospital bed per 2,128 people. Compare that with Australia, where there is one hospital bed per 262 people.
When adequate healthcare services are not available, it is primarily women who end up taking care of the ill at home, or in hospitals as nurses, putting their own health at great risk. Julia Duncan-Cassell, Liberia’s minister for gender and development, reported that 75 per cent of those who have been infected or killed from Ebola were women.
The spread can be stopped
Unlike airborne diseases like the flu, the spread of Ebola can be stopped when caretakers have basic protective measures in place.
And according to Partners In Health founder Dr. Paul Farmer, simple aggressive hydration measures can do a lot to lower the death rate of Ebola patients. But even these basic measures have largely been out of the reach of Liberia’s health care system.
Lack of investment in health care
The lack of investment in health care is neither an accident nor is it a result of natural law. It stems from policies Liberia and other African countries were subjected to – such as the International Monetary Fund (IMF)’s structural adjustment cocktail of privatization, liberalization and budget austerity. These policies undercut the possibility for the government to invest in services and infrastructure, including health care.
Though the IMF is less of an issue than it once was, if you ask the government of Liberia to invest its resources in health care, the answer that is most likely to come back will be “what resources?” In her address of May 21, 2014, Liberian President Ellen Johnson Sirleaf called for a “period of national sacrifice” as she unveiled an “austerity budget” of $559 million. That’s a shocking 17 per cent decrease from the budget of two years ago.
The impact of corporate tax dodging
That the budget cuts continue despite high growth rates (8.1% in 2013) shows us that something is seriously wrong. The companies that dominate the Liberian economy – companies based in G20 countries and investing in natural resource extraction throughout the African continent – are more than likely not paying their fair share of tax.
The African Union estimates that Africa loses up to $60bn each year due to tax dodging by big companies. That is more than Africa receives in aid from rich countries.
The role of the G20
According to Australian Treasurer Joe Hockey, who is hosting the G20 leaders this week, corporate tax avoidance is akin to theft. Though he was speaking of the Australian context, what’s true for Australia is no less true for Liberia. If anything the moral case to stop stealing is stronger when so many lives hang in the balance should another crisis of this kind hit.
G20 countries agreed to end the era of tax havens five years ago. But so far that promise has been largely unfulfilled. There is a plan – known as the Base Erosion and Profit Shifting (BEPS) process – that the G20 claims will make things better, but developing countries should be skeptical.
Everyone agrees that companies that are using tax havens to avoid tax altogether should pay tax, but there is no agreement on where they should pay. Consider a hypothetical company that is based in the USA but has significant operations in Liberia. At the moment it may be paying little tax in either jurisdiction through the use of shell companies in tax havens. But when it pays a fairer share of tax, will it pay in Liberia, in the USA or in both? It seems logical that if that company has economic activities and generating a profit in Liberia, a reasonable amount of its taxes should also be paid there.
The BEPS process is silent on this key issue. That silence may be deadly for those of us living through this crisis and dreading what the next one may be. We were unprepared and under funded this time; our funding and preparedness to the next disaster depends in no small measure on the answer to this question.
Ending tax dodging will not be a silver bullet. Once we have the money we need to make sure they are spent in a way that benefits everyone, not just elites. Citizens of Liberia, women of Liberia, must hold leaders accountable for providing strong social protection and public services. Better quality public services mean women and girls stop paying with their time, resources and labour for healthcare. But unless companies pay their fair share of tax, there will never be enough money, not just in Liberia, but across all countries.
This article was originally published by ActionAid International.