At a time when public coffers around the world are suffering due to increased spending on pensions, healthcare or defense, or due to aid to mitigate the consequences of the war in Ukraine, the pandemic or the energy transition, the loss of approximately 1.7 trillion dollars in four years of revenues due to fiscal engineering applied by multinationals is particularly bloody. In the case of Spain, for this reason the Treasury stopped receiving around 31 billion euros between 2016 and 2021, a sum that is equivalent to more than 5% of healthcare spending or what it collects in a year through corporate tax.
In recent decades, states have faced increasing pressure on their public finances. Government spending has increased significantly due to various structural, social and economic factors, while the tax structure does not fully adapt to the new digital economy and production reality of the 21st century. This imbalance forces governments to look for new mechanisms to increase their revenues and ensure budget stability.
This is a global problem that demonstrates that international tax competition represents a systemic threat, both to the well-being of citizens and to the economic sovereignty of states. The elephant in the room is the lack of a global model that taxes companies’ profits where they do business. There have been some attempts to address the problem, such as the agreement promoted by the OECD which led to 140 states committing to establishing a minimum tax of 15% on multinationals in 2021, to avoid downward competition. But it didn’t work. On the same day as his return to the White House, January 20, Donald Trump signed a decree to revoke the international commitments of his predecessor, Joe Biden, in tax matters. Although the truth is that the Democrat never brought the law to Congress for the entry into force of the agreement and the world’s main economy has never applied it.
The report by researchers at the Tax Justice Network highlights an uncomfortable reality: tax systems are becoming obsolete in the face of the power and influence of large multinationals, particularly American technology companies, whose profits and stock prices are skyrocketing alongside the favorable tax treatment they enjoy. This is where the main problem lies. The radical decrease in the effective tariffs paid by companies such as Google, Amazon, Meta and Apple, thanks to their business model and the reforms approved by the latest US administrations, not only erodes the collection of other countries in which these companies operate, but also hinders the investment plans and fiscal sovereignty of those same states. Allowing multinationals to continue playing the rules in their favor means failing to protect the public interest and perpetuating the ever-widening gap between rich and poor.
