It was not a good year for equality. Soaring profit margins benefited large corporations and their wealthy owners while families struggled to make ends meet and climate change caused deadly disasters.
But there was a silver lining: Governments are turning to the tax system to find solutions to these disparities. Here are our picks for the top 10 tax fairness news stories of 2022.
10. Legal fallout from global tax dodging investigations
Even six years later, the Panama Papers and other explosive leaks into high-level corruption and tax dodging continued to make an impact around the globe. Extremely powerful figures, including billionaires and former Prime Ministers, faced legal consequences in 2022 thanks to the reporting of the International Consortium of Investigative Journalists.
9. Canada to tax share buybacks
The 2022 fall economic statement included a 2% tax on stock buybacks – a financial maneuver that primarily benefits the richest Canadians without bringing any beneficial economic activity. This is a step in the right direction to redistributing extreme wealth concentration but there are many more tax measures that would generate greater revenue.
8. Stronger rules to combat tax avoidance
Canada’s 2022 budget contained measures to crack down on corporate tax avoidance, including strengthening anti-avoidance rules. While this should be speed tracked and strengthened with additional reforms, it is important progress to limiting some of the ways corporations avoid paying tax.
7. Rising prices and profits put spotlight on tax fairness
As Canadian companies increased their prices and profit margins, pressure mounted on the government for new tax measures to redistribute extreme corporate gains. The biggest companies in Canada not only saw profit margins soar by 60% in 2021, they avoided $30 billion in tax, making a solid case for new windfall and excess profits taxes.
6. U.S. takes lead to tackle corporate tax avoidance
Canada should pay close attention to the tax fairness measures included in the U.S. Inflation Reduction Act. One of the most promising policies is a minimum tax on the book profits that large corporations report to their shareholders. Introducing a similar minimum book profits tax in Canada would generate $4 billion in tax revenue annually.
5. Global tax talks move to UN
After years of stalled negotiations to improve the international tax system through the OECD, a motion was accepted this year to create a new UN tax body. C4TF has long advocated for this win, which will include more developing countries and diverse voices in the global fight against tax avoidance.
4. Canada makes headway on beneficial ownership transparency
Budget 2022 committed to accelerate Canada’s timeline to establish a public registry of beneficial owners for companies and real estate. Public registries are important tools to fight tax avoidance and money laundering by making public the owners of companies and property. The challenge now is getting the provinces on board and ensuring the registry has quality and accessible data.
3. Temporary tax on Canadian financial sector's windfall profits
Another win in Budget 2022 was a windfall tax on Canada’s financial sector which saw a whopping $141 billion in profit in 2021. The Canada Recovery Dividend places a 15% one-time tax on bank and insurance companies’ excess profits, and a 1.5% surtax on ongoing profits over $100 million. The tax should be expanded to other sectors, particularly oil and gas, where profits are increasing alongside energy prices.
2. Australia to require tax transparency from multinationals
Australia made history this year with bold plans requiring multinationals publish detailed public country-by-country tax information. Experts have called the public country-by-country reporting “kryptonite for tax havens” and a model that other governments should adopt to hold large corporations accountable.
1. Global push to tax oil and gas windfall profits
Worldwide momentum kept growing to tax oil and gas windfall profits following endorsements from the EU and the UN chief. In 2022, several countries such as the U.K., Germany, Italy began bringing in a windfall taxes on oil and gas profits as corporations continued to profit off the war in Ukraine and contribute to climate change.