“Pay your fucking taxes”: Does Fiscal Evasion Have A Role In Environmental Degradation?
Social media posts claiming figures such as Jeff Bezos or Elon Musk for non-compliance with tax obligations proliferate. The claims and collective rage have reached such levels that the networks exploded with an alleged statement of the United Nations’ World Food Programme Director, Davi Beasley, which suggested that:
“2% of Elon Musk’s wealth [6 billion dollars] could help solve world hunger [42 million people].”
Although Beasley’s point was nuanced with a correction added after the CNN story was published — which emphasized “help to solve” and not “solve” — it is clear that tax evasion poses one of the most significant social injustices today [1]. As such, the question becomes: Is tax evasion a process also linked to environmental degradation?
After dreaming up this question in a sort of nocturnal epiphany, I sat down in front of the computer, and as expected, the internet had the answer. Victor Galaz, a researcher who has dedicated his career to understanding large-scale environmental change and its relationship to financial systems, published an article in Nature addressing this question [2].
In their research, Galaz and his collaborators used classified documents to quantify the connections between tax havens, tax evasion, and environmental degradation. In particular, the researchers focused their attention on two cases: global fisheries and the Brazilian Amazon [2].
The results show figures that the furious twitterer would be eager to share. The opaque world of tax havens has political, economic, and social implications, yet environmental impacts could be the most relevant issue.
The fishing industry shows that 70% of the vessels involved in illegal fishing do not declare tax or have a relationship with tax havens. Meanwhile, 4% of all legally registered fishing vessels currently have links with tax havens. Leaving the sea and passing into the world’s largest rainforest, the Amazon, 68% of all foreign capital in the documents investigated (2000 to 2011) was transferred to Brazil through nine soybean and livestock production companies via one or more fiscal paradises [2]. The money transferred was used to promote land-use change and industrial agriculture expansion.
With figures of more than 10 billion dollars transferred to countries such as the Cayman Islands or Bahamas, these tax evasion schemes weaken the establishment and operation of “green taxes” to mitigate and remediate environmental impacts, such as the so-called Carbon Credits. The authors urge the incorporation of tax havens into international environmental agendas:
“The international community should intensify its attempts to stimulate corporate transparency and collaborate to uncover and fight tax evasion, viewing such actions as important not only from a socio-political perspective, but also for environmental reasons.”[2]
At this point in the text, in addition to a crazy desire to tweet, you may have two questions: How do these evasion figures translate into environmental degradation quantitatively speaking? Would paying “green taxes” really solve the problem?
Given the complexity and interconnectivity between social, economic, and ecological processes, the first question is difficult to answer. Moreover, If we consider that access to this information is virtually impossible, this complexity is multiplied. However, as Galaz and co-authors suggest, this should not discourage the scientists — or the average twitterer — from positioning the lack of fiscal transparency and tax evasion as one of their most pressing concerns [2].
The answer to the second question is NO, but let’s put some nuances to it. Environmental taxes solve neither ecological degradation nor socio-environmental injustices. Sometimes they even exacerbate problems, as described with public policies and financial programs aimed at climate change [4]. Nevertheless, solving the lack of transparency, illegality, and scarcity of funds will undoubtedly bring us a few steps closer to finding a solution to the problems that plague this planet — the one that Musk and Bezos insist on seeing from space.
I want to conclude with a brief reflection on the relationship between tax havens and the super-rich like Musk and Bezos. Many articles explain that super-rich do not hold their fortunes in cash or receive income in the same way we (the poor sods) do, making tax collection a challenge to quantify. I’m also not implying that the super-rich evade taxes [3], yet I’m issuing a moral demand for financial institutions and billionaires to encourage transparency or fairer contributions. Ecosystems, Twitter, and I are calling for it: “Can you just fuckin’ pay taxes, please.”
