finance & economy

Tunisia loses 1% equivalent of GDP in tax revenues annually (Report)

November 29, 2021

TAP) - Tunisia's total annual tax revenue losses amount to $413 million (TND 1,196.67 million), or the equivalent of 1% of GDP, according to the report “ The State of Tax Justice 2021.”
The report was published in November 2021 by the Global Alliance for Tax Justice, Public Services International (PSI) and the Tax Justice Network.
These losses are divided between those related to corporate tax fraud, which are around $374.25 million (TND 1,084.39 million), and those related to offshore wealth, which are $38.7 million (TND 112.13 million), added the report.
These annual tax losses equal the “possible complete vaccination of 24 million people,” i.e. about twice the population of Tunisia. Annual tax losses due to corporate tax abuse amount to 0.9% of the country's GDP.
Profits made in Tunisia and transferred abroad are estimated at $1,497 million (about TND 4,337.56 million). In this respect, the offshore wealth held by Tunisian citizens is about $2.2 billion (TND 6.37 billion), which represents 5.6% of GDP. As for the loss of tax revenue linked to offshore wealth, it is around $38.7 million (TND 112.13 million).
The report states that for Tunisia, the investment portfolio (domestic) is the most vulnerable trading vector, with a vulnerability score of 59, compared to a regional average vulnerability of 55.
The main trading partner responsible for the vulnerability is the United States (38.3%), followed by Japan (22%) and Germany (7.6%).

Every single second, the wealthiest strip countries of enough tax to fully vaccinate 1000 people

Globally, annual tax losses this year amount to $483 billion (lost to tax havens), of which $312 billion is lost to cross-border corporate tax abuse by multinationals, and US$171 billion is lost to tax evasion by wealthy individuals who move their money offshore.
The report states that multinationals move $1,190 billion in profits to tax havens each year, costing governments around the world $312 billion a year in direct tax revenues.
The State of Tax Justice 2021 estimates that the $483 billion the world loses to tax havens in a year would cover the cost of fully vaccinating (two doses) the global population more than three times over. “Every single second, the wealthiest strip countries of enough tax to fully vaccinate 1000 people.”
“Higher-income countries lose more tax but their tax losses represent a smaller share of the money they have to spend. Lower-income countries lose less tax but their losses represent a far larger share of the money they have to spend. Most of global tax abuse is made possible by abusive regulation in rich countries, not palm-fringed islands,” the report says.
The report suggests solutions such as moving rule-making on international tax from the OECD to the UN, introducing an excess profits tax on multinational corporations that made excess profits off of pandemic lockdowns and interventions, and introducing wealth taxes on the wealthiest individuals to fund pandemic recovery.
“An effective tax system delivers the 4 Rs of tax: revenues to fund public services; redistribution to curb inequalities; repricing to address public harms such as fossil fuel extraction and tobacco consumption; and political representation – recognising the key role of tax in ensuring governments are held accountable.”
Cross-border tax abuse results directly in lost revenues. But it also undermines governments’ ability to redistribute, by narrowing the scope for progressive taxation of wealth and income. That, in turn, drives a “race to the bottom”.
Investors and elites argue for lower tax rates and ever-greater tax “incentives”, further weakening the state’s capacity to deliver both revenues and redistribution.
The Global Tax Justice Alliance is a network of NGOs from around the world that advocates for financial transparency, tax justice and wealth redistribution. Through its State of Tax Justice programme and its partners, it receives financial support from the European Union's “The Horizon 2020” Programme.

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