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Saoirse McHugh: Carbon tax is a red herring, the real climate culprit is the global tax system

It’s time for governments to fix the global tax system, for the sake of the planet.

Saoirse McHugh

IN HER FORTNIGHTLY column for TheJournal.ie, Saoirse McHugh of the Green Party writes about what we can do as individuals in the face of climate chaos.   

The government’s recent domestic carbon tax has received a huge amount of attention. Oftentimes it is the first thing that is mentioned by some politicians and media personalities when talking about climate breakdown.

Because of this, it has skewed public perception of both what climate action means and how effective a measure a carbon tax is. I think a carbon tax would only be useful in encouraging people to change behaviours if there were feasible alternatives in place.

Isn’t it our fault?

In situations like the ones that I and thousands of others around the country find themselves in (insecure lease, no convenient public transport routes, very limited food market options) the only difference a carbon tax makes is increasing the cost on things that are everyday necessities.

When there is sufficient public transport, landlord regulation, and state-funded retrofitting of houses, perhaps then people will make less carbon-intensive choices.

I can only speculate as to why the carbon tax was the big piece of climate action that the government chose to implement and rhetorically lead with.

Perhaps it is down to the fact that it does not require any ideological shift nor actual policy change; it fits snugly into the personal responsibility storyline that prioritises individual choice over regulation on polluting industries.

Who does the tax system serve?

That is not to say that there is no need for us to be talking about tax in the context of climate breakdown. The international tax system has long been used as a tool to extract immense wealth from low and middle income countries.

According to a 2016 financial report by US-based Global Financial Integrity (GFI) and the Norwegian School of Economics’ Centre for Applied Research, during 2012 (the last year that data of this scale was compiled) over $2 trillion ($2,000,000,000,000) was moved from developing countries to the rest of the world.

Some of this was in the form of debt interest repayment but the vast majority of this wealth was extracted through trade.

Companies falsify invoices and the cost of products, known as trade misinvoicing, and shift profits between the same companies in different jurisdictions in order to stash as much profit as possible in tax havens.

Ireland has faced growing criticism in recent years for our corporate tax system, with some accusing us of playing a big role in the global tax avoidance network by facilitating the movement of vast wealth around the globe.

Just this week, US presidential candidate, Joe Biden, appeared to put Ireland firmly in the crosshairs for aiding “illegal corporate tax avoidance”.

Adapting and responding to climate change is already difficult enough. Here in Ireland, our politicians regularly talk about the cost of climate action as a reason for delayed and insufficient responses to climate breakdown (while conveniently avoiding mentioning the cost of climate inaction).

Even though we must deal with our territorial emissions, we also must look at what we are allowing and encouraging. To decarbonise societies and to do so equitably, countries need money.

Additionally, the secrecy that is part and parcel of the global tax avoidance network is vital in supporting illegal fishing, illegal deforestation, and illegal mining.

While it might feel like in Ireland we have managed to pull a fast one when it comes to corporate tax, it is a Pyrrhic victory.

We host extensive banking activity which, according to the international monitoring body, Tax Justice Network, poses serious threats to the stability of the global financial system.

We can do better

Anybody who is old enough to remember the recession and has witnessed the deterioration in public services in the aftermath has no desire to return to that time.

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We have become so dependent on the companies that have moved offices here for tax purposes that we have long been described as a captured state: bound to serve the interests of international finance and therefore increasingly vulnerable to their whims.

Due to the nature of climate breakdown it is in our best interests for other countries to transition away from high carbon emissions as quickly as possible; denying them the funds to do so is not only morally wrong but will also have tangible negative effects felt here. 

We need to realise that we have more in common with a person earning €5 per day than we do with those who benefit from moving trillions of euro, untaxed, around the world.

We share the same interests as people in poorer countries, our wants and desires are the same, we are all affected by the same environmental problems and we are all being used and abused by the same system.

We must stop dragging our heels. Only by honest and transparent cooperation between all countries will we be able to create a fair and equal tax system and it will be to the benefit of us all.


About the author:

Saoirse McHugh

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