Economics can be tough to understand at the best of times, but here's an issue which I'm sure we will all be able to understand and feel a bit irritated about.
Every year normal people like you and I pay tax to the government.
It sucks, but as normal people we pay our dues and get on with things.
If you're super rich however, and you are able to hire very expensive management consulting firms, lawyers and other financial specialists, you can easily rig your tax affairs to pay far less tax proportionally than normal people pay and put huge amounts of profits in offshore tax havens where the money just sits - not being productive at all and not being paid to governments who are trying to quell a public pandemic with public debt.
'Governments around the world are losing $427 billion each year to tax avoidance and evasion as companies and wealthy individuals shift their money to tax havens, according to a comprehensive new report that urges an overhaul of the “broken” tax system.' - via
“With the coronavirus pandemic shining a harsh light on the grave cost of underfunded health and public services around the world … these figures represent a tragedy,” the authors wrote. “Tax abuse is depriving countries of billions and billions in urgently needed tax and holding us all back from building better, healthier, fairer societies.”
In South Africa, nearly US$3.4 billion is lost every year due to illicit tax behaviour.
That's the equivalent of 22% of the annual health budget or 16% of the amount we spend on education every year.
Of course it's not news that billions of dollar of public money is siphoned off to tax havens by the rich - and it's also not news as to how destructive this practice is.
The outbreak of the coronavirus is due in large part to the failure of the global public healthcare system, which has been underfunded for decades as a result of this behaviour.
The news in not new.
But there is a significant amount of cognitive dissonance amongst the world 's leaders to solve the issue. They know it's not presently sustainable, but do absolutely nothing to change it. There appears to be a distinct lack of political will to begin the process of fixing what we know if wrong.
Outrageous private profit at public expense is the name of the game here; the same can be said of climate change.
If you want a high impact leverage point that will begin to address many of the world's current issue - look no further than this one.
If this continues to be the can that gets kicked down the road, the long-term socio-economic prospects for the world do look precarious and may well result in a significant increase in the amount of violence and unrest that we are already starting to witness.
BTW - this is not about a binary, overly-simplified argument about the apparently easy choice between 'capitalism' and 'socialism'. There are in fact an infinite number of ways that an economic system can produce prospretity, while at the same time not causing the destruction of the planet and society as a consequence.