Why the Panama Papers Are a Women's Rights Issue
Everyone from Emma Watson to the former Icelandic prime minister has been embroiled in the leak from Panama law firm Mossack Fonseca. Here, we explore how tax evasion hurts women.
Screencap via YouTube
Tax dodging is a feminist issue. To understand why, let's begin by naming names. Not the power players we've already seen splashed in the papers over the Panama Papers leak—the politicians and the shareholders, Iceland's Prime Minister, or even Emma Watson, who later claimed to have set up an offshore company for the sole purpose of "protecting... anonymity and safety."
Let's start with those who actually do pay their taxes and are the ones who can least afford it: Millions of hardworking women who are—right now—plugging a $600 billion gap in the world's economy, under the radar and out of sight.
Asana Abugre is one of them. She owns a small shop in Accra, Ghana, making and selling tie-dyed textiles. Abugre works hard; and she pays hard. All the women here do. Up to 37 percent of their income goes directly to the tax collectors who regularly knock on their door. Deferral isn't an option and there is nowhere to hide. These women are picking up the bill for the members of Africa's elite, who have stashed a third of their wealth in tax havens abroad.
It's thanks to gender policy advisors Francesca Rhodes and Chiara Capraro, who work at Oxfam GB and Christian Aid UK respectively, that Abugre's story is finally being linked with global tax evasion. The pair outlined why tax justice for women's rights is imperative in a compelling openDemocracy article published in April.
"Tax dodging by the rich and powerful ultimately shifts the tax burden onto those who can least afford it. Someone has to pay for the infrastructure and services we all need," Rhodes tells me.
That 'someone' is usually a woman in the developing world. "When those at the top of the economic pyramid use law firms and shell companies to dodge paying tax and contributing to society, the impact is felt hardest by those at the bottom," Rhodes explains.
Look closely at the Panama Papers: 11.5 million leaked documents from the Panamanian law firm, Mossack Fonseca, detailing financial information for more than 214,488 offshore accounts. You'll quickly see that the names involved are overwhelmingly male, because positions of power are predominantly held by men. Rhodes says that, globally, only 23 percent of national politicians are women and just 20 of the world's top 500 companies have women CEOs. Crammed at the bottom of the pyramid, the world's poorest are disproportionately women and girls in low-paid, insecure jobs.
And it's not just Panama. Switzerland is top ranked in the Tax Justice Network's Financial Secrecy Index, ahead of Hong Kong, the US, and Singapore. In March of this year, a groundbreaking submission was issued in Geneva questioning whether the tiny European country should answer to the charge that its "opaque financial system" undermines women's rights, especially in the developing world. The Center for Economic and Social Rights (CESR) is one of four collaborators who worked on this submission. "Switzerland has a long history of selling secrecy," says Nicholas Lusiani, the director of CESR's Human Rights in Economic Policy Program.
Wealthy individuals would traditionally put their money in bank shares but that has changed over the last 20 years, Lusiani says. These days, it's predominantly rich corporations that are transferring their profits to Switzerland, where tax is very low. CESR estimates that almost a trillion dollars leaves the developing world for the developed every year. And when poor governments are robbed of revenue—in Colombia or Zambia, for instance—women are left plugging the revenue gap.
"You get this kind of vicious cycle where the money is going to the top," Lusiani explains. "Those who are CEOs, those who are wealth managers, tax attorneys, are generally white men. And it's generally the lower paid, over-burdened women that have to pick up the tab." Lusiani calls this "a reverse Robin Hood effect": when money is transferred out of the pockets of poor women in impoverished countries, and into financial secrecy jurisdictions like Switzerland.
Rhodes, Caparo and Lusiani cite three specific reasons why financial secrecy and tax avoidance is a pressing feminist issue. Firstly, and fundamentally, tax dodgers are starving the 'care economy.' Women and girls carry out 75 percent of this unpaid work. When there is no crèche for a child or palliative care for a grandparent due to lack of public funds, it is generally women who take up the role—and in the process, increasing their working hours and diminishing any time for paid work, study or rest. "In places without electricity or running water, it's women and girls who spend hours each day cleaning, cooking and fetching water," Rhodes adds.
A loss of tax revenue also means there is less money for essential public services: schools, hospitals, and social protection. "When poor families have to choose which of their children to send to school," Rhodes explains, "it's girls who tend to miss out on an education that could be a route out of poverty."
Then there's VAT. When governments fail to raise tax revenue from wealthy individuals and corporations, upping sales taxes is the quickest way to cover the shortfall. Not only do these indirect taxes affect those on the lowest incomes, they target women's domestic spending habits. As Capraro and Rhodes note in openDemocracy, women are traditionally more likely to balance house budgets. Take childrenswear, for instance: VAT-free in the UK but not in many other countries, such as Ghana.
What needs to be done? Lusiani tells me Switzerland has never carried out a study to assess their impact on women's rights and gender equality. "So, we've asked them to do that—and we've asked the UN to support that request," he says. "The laws need to change. Tinkering with individual pieces of legislation is not really working anymore. We need to rethink how we conceptualize international taxation and create new laws."
However, as Rhodes points out, "At UN negotiations in March we once more saw world leaders failing to do enough to fight tax avoiders. Despite some progress, piecemeal proposals leave tax dodgers plenty of loopholes to exploit and tax havens open for business. We need joined-up plans to end offshore secrecy globally."
Calling on world leaders to urgently prioritise women's rights and economic justice certainly seems like a step forward. However, considering 140 politicians from more than 50 countries have been embroiled in the recent Panama Papers leak, I wonder how positive Rhodes feels about the urgency to change things. Is the will there?
"Ordinary people around the world are fed up with seeing one rule for the rich—usually men—at the expense of everyone else," she says.
"The fact that last year world leaders committed to achieving women's rights and gender equality by 2030 is a significant step forward. Now we need to see real action to make that happen."
Working women, like Asana Abugre, can't afford to wait.