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Global Tax Justice and the Resource Curse: What Do Corporations Owe?

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Tax abuse by multinational extractive corporations should be an important subject of attention for global justice because it exacerbates the unjust global distribution of resources and contributes to the resource curse. The amounts of taxes at stake dwarf the current levels of international aid. This abuse is not necessarily unlawful but is enabled by the interaction of complex international tax rules. It is “abuse” because it contravenes a number of theoretical understandings of global tax justice, several of which are explored here: egalitarianism, two variants of restitution-based justifications and corporate citizenship. Within each of these justificatory frames, global justice in the resource context requires restoring a fair share of the benefits from natural resources to the impoverished populations of resource-rich countries. Justice, thus understood, can and should be achieved through the effective taxation of extractive companies. This article is a first step toward filling a lacuna in the literature on taxation and development, which tends to encourage decreased taxation in order to promote foreign investment, to the exclusion of concerns about justice and which conceives taxation as a purely domestic issue, not one involving international rules that have the effect of distributing revenue among nation states.


I am grateful to Robert Lepenies, Shmuel Nili, Thomas Pogge and other participants in the Yale Global Justice Program for helpful discussion, as well as Rachel Bergenfield, Mary Bridges, Krishen Mehta, Ernest Poole, Hunter Smith and the editors and anonymous referees of this journal for their helpful comments on this paper in its various stages of development. I am also deeply grateful to the Gruber Foundation at Yale for their generous support.

  1. 1

    Savior Mwambwa, “We Need Greater Transparency Over Tax Payments,” Guardian blog Poverty Matters, April 15, 2011, online at:

  2. 2

    According to the most recent UN data on human development from 2012, Zambia is ranked in the category of “low development” countries, in the 163rd place (out of a total of 186 countries), below even the sub-Saharan African averages. See The story of Glencore’s tax abuse in Zambia is presented in the documentary “Stealing Africa,” online at: See also Chiwoyu Sinyangwe, “Mopani Pilot Audit Reveals Tax Payment Irregularities,” Zambia Post, February 9, 2011. The full text of the audit report is publicly available at

  3. 3

    NGO advocates have documented the correlations between the resource curse and global poverty. See, for example, Michael Ross, Extractive Sectors and the Poor (Oxfam America: 2001).

  4. 4

    On the academic debate of the legal status of international tax, see Reuven Avi-Yonah, International Tax as International Law: An Analysis of the International Tax Regime (Cambridge University Press: 2007).

  5. 5

    Tax avoidance can also be defined by reference to the spirit and intent of the law (rather than its letter), an approach adopted formally in UK jurisprudence, where tax avoidance is understood as “a course of action designed to conflict with the evident intention of Parliament.” IRC v Willoughby [1997] STC 995 at p.1004. I do not follow it here because my primary concern is with moral rather than legislative principles, but the two angles are related insofar as spirit of the law should be guided by moral principles.

  6. 6

    The dividing line between avoidance and evasion is constantly shifting, partly due to the fact that major corporations continually seek to influence relevant policymakers to move that line in their favor. Moreover, at the international level, this lobbying is enabled by rulemaking processes that are largely concealed from public scrutiny. See Allison Christians, “Networks, Norms and National Tax Policy,” Washington University Global Studies Law Review 9, 1 (2010): 1–37 (discussing how soft law global tax policy norms emerge out of complex transnational networks).

  7. 7

    On formulary apportionment, see Kimberly A. Clausing and Reuven S. Avi-Yonah, “Reforming Corporate Taxation in a Global Economy: A Proposal to Adopt Formulary Apportionment,” June 2007. Online at: On country-by-country reporting see Richard Murphy, “Country by Country Reporting: Accounting for Globalization, Tax Justice Network, 2012. Online at:

  8. 8

    This is not meant to be an exhaustive list of possible justifications: for example, conceptions of tax justice have been derived from Judeo-Christian doctrines and from feminism, neither of which is explored here; in addition, tax justice in the context of resource extraction could also be defended on the grounds of important environmental benefits which I do not explore here. Theological conceptions have been advanced by Martin Timothy Crowe, The Moral Obligation of Paying Just Taxes (Catholic University of America Press: 1944); Susan Hamill, “An Argument for Tax Reform Based on Judeo-Christian Ethics,” Alabama Law Review 54, 1 (2002): 1–112. For a feminist analysis, see Kim Brooks, “Global Distributive Justice: The Potential for a Feminist Analysis of International Tax Revenue Allocation,” Canadian Journal of Women and the Law/Revue Femmes et Droit 21, 2 (2009): 267–97.

  9. 9

    Thomas W. Pogge, “Eradicating Systemic Poverty: Brief for a Global Resources Dividend,” Journal of Human Development 2, 1 (2001): 59–77, reprinted in chapter 8 of World Poverty and Human Rights (Polity: 2008); Martin E. Sandbu, “Natural Wealth Accounts: A Proposal for Alleviating the Natural Resource Curse,” World Development 34, 7 (2006): 1153–70; Shantayanan Devarajan, Hélène Ehrhart, Tuan Le, and Gaël Raballand, “Direct Redistribution, Taxation, and Accountability in Oil-Rich Economies: A Proposal,” Center for Global Development Working Paper 281 (2011); Mitchell A. Kane, “Bootstraps and Poverty Traps: Tax Treaties as Novel Tools for Development Finance,” Yale Journal on Regulation 29 (2012): 255–419.

  10. 10

    Such critiques of aid have come from various corners, from Western development economists such as William Easterly as well as African voices such as Dambisa Moyo of Zambia and James Shikwati of Kenya. William Easterly, The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good (Penguin: 2006); Dambisa Moyo, Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa (Farrar, Straus and Giroux: 2009); “For God’s Sake, Please Stop the Aid!” interview with James Shikwati, Spiegel, July 4, 2005. Online at:

  11. 11

    Gerald A. Cohen, “Where the action is: on the site of distributive justice,” Philosophy and Public Affairs 26, 1 (2006): 3–30.

  12. 12

    One of the very few exceptions is Ilan Benshalom, “The New Poor at Our Gates: Global Justice Implications for International Trade and Tax Law,” New York University Law Review 85, 1 (2010): 1–82.

  13. 13

    John Rawls, Political Liberalism (Columbia University Press: 1993), pp. 5–6.

  14. 14

    Within legal academia, this argument was famously made by Louis Kaplow and Steven Shavell, Fairness versus Welfare (Harvard University Press: 2006).

  15. 15

    As a World Bank tax policy advisor concedes, “it is rare that much policy discussion of taxation adequately considers the distributional or stabilization dimensions of the fiscal problem; instead, discussion focuses mainly on efficiency concerns.” Robert M. Bird, “Taxation and Development,” World Bank – Economic Premise 34 (2010): 2. There are some encouraging signs that this is now beginning to change, if slowly: a welcome development in this direction is the 2011 conference of the intergovernmental International Tax Dialogue, which brought together finance ministers and senior tax officials around the theme of tax and inequality. The conference program tackled an extraordinarily wide range of issues, but unfortunately it left out the more critical and controversial challenges of international taxation, most crucially the challenges of taxing multinational corporations. For details see

  16. 16

    Allison Christians, “How Nations Share,” Indiana Law Journal 87, 4 (2012): 1407–1453.

  17. 17

    Thushyanthan Baskaran and Arne Bigsten, “Fiscal Capacity and the Quality of Government in Sub-Saharan Africa,” World Development 45 (2012): 92–107; Yener Altunbas and John Thornton, “Does Paying Taxes Improve the Quality of Governance? Cross-Country Evidence,” Poverty & Public Policy 3, 3 (2011): 1–17; Wilson Prichard and David K. Leonard, “Does Reliance on Tax Revenue Build State Capacity in Sub-Saharan Africa?” International Review of Administrative Sciences 76, 4 (2010): 653–75; Taxation and State-Building in Developing Countries: Capacity and Consent, edited by Deborah Braütigam, Odd-Helge Fjeldstad, and Mick Moore (Cambridge University Press: 2008); Mick Moore, “How Does Taxation Affect the Quality of Governance?” Tax Notes International 47, 1 (2007): 79–98.

  18. 18

    Daron Acemoglu and James Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty (Crown Business: 2012).

  19. 19

    Halvor Mehlum, Karl Moene, and Ragnar Torvik, “Institutions and the Resource Curse,” The Economic Journal 116, 508 (2006): 1–20.

  20. 20

    Clemens Fuest and Nadine Riedel, Tax Evasion, Tax Avoidance and Tax Expenditures in Developing Countries: A Review of the Literature, Oxford University Centre for Business and Taxation for UK Department for International Development (DFID), June 19, 2009 (citing and critiquing estimates from Christian Aid (2008), op. cit.). Beyond focusing on tax losses alone and taking into account other forms of financial flows, studies of capital flight from Africa have concluded that Africa is actually a net creditor to the rest of the world. James Boyce and Léonce Ndikumana, Africa’s Odious Debt: How Foreign Loans and Capital Flight Bled a Continent (Zed Books: 2011); Léonce Ndikumana and James K. Boyce, Capital Flight from Sub-Saharan African Countries: Updated Estimates, 1970–2010, University of Massachusetts at Amherst Political Economy Research Institute (PERI) Research Report, October 2012 (finding that the group of 33 sub-Saharan African countries covered in the report has lost a total of US$814 billion from 1970 to 2010). Online at:

  21. 21

    Léonce Ndikumana and Kaouther Abderrahim, “Revenue Mobilization in African Countries: Does Natural Resource Endowment Matter?” African Development Review 22, 3 (2010): 351–65.

  22. 22

    Matthew Hill, “Zambia Says Tax Avoidance Led by Miners Costs $2 Billion a Year,” Bloomberg, November 25, 2012.

  23. 23

    This incoherence between aid and tax policies is present in many Western countries, notably including the Netherlands, which is an important low-tax jurisdiction for structuring abusive tax transactions. Francis Weyzig and Michiel Van Dijk, “Incoherence between Tax and Development Policies: the Case of the Netherlands,” Third World Quarterly 30, 7 (2009): 1259–77.

  24. 24

    For a discussion of whether tax policy should be affected by considerations of how the collected revenues are spent, see Walter J. Blum and Harry Kalven Jr., The Uneasy Case for Progressive Taxation (University of Chicago Press: 1953), pp. 100–03.

  25. 25

    Corporate tax abuse and my argument for ending it are not necessarily limited to the resource sector. For example, UK-based beer brewer SABMiller and sugar giant Associated British Foods have been subjects of recent investigations and campaigns by advocacy organization Action Aid. Calling Time: Why SABMiler Should Stop Dodging Taxes in Africa(ActionAid: November 2010). Online at: Sweet Nothings (Action Aid: February 2013). Online at:

  26. 26

    Amartya Sen, “Equality of What?” Tanner Lecture on Human Values delivered at Stanford University, May 22, 1979. Online at: Daniel Markovits, “How Much Redistribution Should There Be?” Yale Law Journal 112 (2003): 2291–2329.

  27. 27

    Markovits, op. cit., p. 2293, n. 11.

  28. 28

    John Rawls, The Law of Peoples: with The Idea of Public Reason Revisited (Harvard University Press: 2001).

  29. 29

    Thomas W. Pogge, Realizing Rawls (Cornell University Press: 1989), pp. 240–73. Thomas Pogge, “The Incoherence between Rawls’s Theories of Justice,” Fordham Law Review 72, 5 (2004): 1739–59.

  30. 30

    Rawls, op. cit., pp. 105–13.

  31. 31

    As Linda Sugin argues, “Scholars have differed about which tax would satisfy Rawlsian principles precisely because a wide variety of taxes could all be consistent with those principles. This approach to taxation and theories of distributive justice, though less determinate, provides a better analytical framework than attempting to infer specific tax institutions from a general political theory.” Linda Sugin, “Theories of Distributive Justice and Limitations on Taxation: What Rawls Demands from Tax Systems,” Fordham Law Review 72, 5 (2004): 1991–2014, 2001.

  32. 32

    John Rawls, A Theory of Justice (Oxford University Press: 1999; rev. ed., orig. pub. 1971), pp. 246–7; John Rawls, Justice as Fairness: A Restatement (2001), p. 161. See Barbara H. Fried, “The Puzzling Case for Proportionate Taxation,” Chapman Law Review 2 (1999): 157–195, 185 (arguing that Rawls’s preference for a flat tax “stands as an island of deontological rights swamped by a sea of redistribution”).

  33. 33

    Pogge, “Eradicating Systemic Poverty”; Thomas W. Pogge, “An Egalitarian Law of Peoples,” Philosophy & Public Affairs 23, 3 (1994): 195–224.

  34. 34

    Pogge’s proposal has prompted some critical reactions, which are largely irrelevant to my argument. Dirk Haubrich, “Global Distributive Justice and the Taxation of Natural Resources – Who Should Pick Up the Tab?” Contemporary Political Theory 3, 1 (2004): 48–69; Hillel Steiner, “Just Taxation and International Redistribution,” pp. 171–91 in Ian Shapiro and Lea Brilmayer (eds.), Global Justice (New York University Press: 1999); Roger Crisp and Dale Jamieson, “Egalitarianism and a Global Resources Tax: Pogge on Rawls,” pp. 90–101 in Victoria Davion and Clark Wolf (eds.), The Idea of a Political Liberalism: Essays on Rawls (Rowman & Littlefield, 2000).

  35. 35

    Anarchy, State and Utopia, pp. 169–72.

  36. 36

    Thomas Pogge, World Poverty and Human Rights (Polity: 2008), pp. 209–11.

  37. 37


  38. 38

    Thandika Mkandawire, “On Tax Efforts and Colonial Heritage in Africa,” Journal of Development Studies 46, 10 (2010): 1647–69.

  39. 39

    Nicholas Shaxson, “Tax Havens: An Emerging Challenge to Africa’s Development Financing,” Association of Concerned Africa Scholars Bulletin 87 (Fall 2012): 56–57. See also Nicholas Shaxson, Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens (Palgrave Macmillan: 2011), especially pp. 87–106, Chapter 5, “Construction of a Spiderweb: How Britain Built a New Overseas Empire.”

  40. 40

    To be sure, the costs of tax abuse by multinational extractive companies are borne not only by the developing countries where the resources are found but also by developed countries where the extractive companies are based. There are encouraging signs that Britain is waking up to the costs of tax abuse, as evidenced by the recent parliamentary hearings and report on tax avoidance by multinational companies and the resulting tax gap. House of Commons, Public Accounts Committee, Nineteenth Report on HM Revenue and Customs: Annual Report and Accounts, December 3, 2012. Online at:

  41. 41

    Some critics of restitution have pointed out the difficulties of justifying restitution over very long time scales. George Sher, “Ancient Wrongs and Modern Rights,” Philosophy & Public Affairs 1 (1981): 3–17. Jeremy Waldron, “Superseding Historic Injustice,” Ethics 103 (1992): 4–28.

  42. 42

    The benefit principle dates back at least as far back as John Stuart Mill’s critical discussion in Principles of Political Economy, Book V, Chapter II, On the General Principles of Taxation (orig. 1848, William J. Ashley, ed. 1909). In its modern version, the benefit principle was advanced by two Swedish economists, Lindahl and Wicksell. Knut Wicksell, “A New Principle of Just Taxation” orig. 1896, trans. James Buchanan, in Richard A. Musgrave and Alan T. Peacock (eds.), Classics of the Theory of Public Finance (New York: St. Martin’s Press, 1958), pp. 72–118; Robert Lindahl, “Just taxation: a positive solution” orig. 1919, in Musgrave and Peacock (eds.), pp. 119–36.

  43. 43

    Gillian Brock, “Taxation and Global Justice: Closing the Gap between Theory and Practice,” Journal of Social Philosophy 39, 2 (2008): 161–84, 169.

  44. 44

    “There is nobody in this country who got rich on his own. Nobody. You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for.” A video of Warren’s remarks is available online at

  45. 45

    On limited liability, see Johannes Becker and Clemens Fuest, “Why is there Corporate Taxation? The Role of Limited Liability Revisited,” Journal of Economics 92 (2007): 1–10. On “too big too fail,” a recent IMF study estimates that the implicit government subsidy significantly lowers big banks’ borrowing costs by 0.6–0.8%. Kenichi Ueda and Beatrice Weder di Mauro, “Quantifying Structural Subsidy Values for Systemically Important Financial Institutions,” Working Paper of the International Monetary Fund No. 12/128 (2012).

  46. 46

    I use the term “owner” here to reflect a political reality (in line with what Pogge calls “the international resource privilege”) rather than any particular theory of ownership.

  47. 47

    This is “the membership principle” as formulated in Peter Dietsch and Thomas Rixen, “Tax Competition and Global Background Justice,” Journal of Political Philosophy (forthcoming, early view in 2012): 1–28, 9.

  48. 48

    Lynn A. Stout, The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public (Berrett-Koehler Publishers: 2012) (quoting Merrick Dodd, “For Whom Are Corporate Managers Trustees?” Harvard Law Review 45, 7 (1932): 1145–63).

  49. 49

    For a thoughtful discussion of CSR and taxes, see Matthew Genasci and Sarah Pray, “Extracting Accountability: The Implications of the Resource Curse for CSR Theory and Practice,” Yale Human Rights and Development Law Journal 11 (2008): 37–58, 55–8.

  50. 50

    Compania General De Tabacos De Filipinas v. Collector of Internal Revenue, 275 U.S. 87, 100 (1927, dissenting opinion by Holmes); Stephen Holmes and Cass R. Sunstein, The Cost of Rights: Why Liberty Depends on Taxes (WW Norton: 2000).

  51. 51

    “Starbucks Agrees to Pay More Corporation Tax,” BBC, December 6, 2012. Similar consumer-driven tax protests in the UK have previously targeted Topshop and Vodafone: “Topshop’s Flagship London Store Hit by Tax Protest,” BBC, December 4, 2010; Adam Gabbatt, “Tax Protest Turns Vodafone’s Smile Upside Down,” Guardian, December 12, 2010.

  52. 52

    Richard Hardyment, Peter Truesdale, and Mike Tuffrey, Tax as a Corporate Responsibility Issue: the Implications for Multinationals (Corporate Citizenship: 2011), p. 2.

  53. 53


  54. 54

    Jeff Strabone, “Tax Justice: The Next Great American Movement,” February 20, 2012. Online at:

  55. 55

    See Blum and Kalven, op. cit.

  56. 56

    Tom Bergin and Sinead Cruise, “Ethical Investors Step Up Focus on Tax Avoidance,” Reuters, January 20, 2013.

  57. 57

    For a broad critique of tax shaming, see Joshua D. Blank, “What’s Wrong with Shaming Corporate Tax Abuse,” Tax Law Review 62 (2009): 539–590.

  58. 58

    Nicholas Kaldor, “Will Underdeveloped Countries Learn to Tax?” Foreign Affairs 41 (1962): 410–419.

  59. 59

    In June 2013, the IMF issued an internal exploratory paper on its potential role in international taxation.

  60. 60

    Bird, op. cit., p. 2; Rolando Ossowski et al., “Managing the Oil Revenue Boom: The Role of Fiscal Institutions,” Occasional Paper of the International Monetary Fund No. 260 (2008).

  61. 61

    See e.g., Janet Gale Stotsky and Asegedech WoldeMariam, “Tax effort in sub-Saharan Africa,” Working Paper of the International Monetary Fund No. 97/107 (1997). “Tax effort” is defined in the literature either as tax revenue as a share of GDP or as the ratio between the actual and the econometrically predicted tax shares of GDP.

  62. 62

    Roger Gordon and Wei Li, “Tax Structures in Developing Countries: Many Puzzles and a Possible Explanation,” Journal of Public Economics 93, 7 (2009): 855–66.

  63. 63

    For example, this is how one study described tax evasion by individuals in low-wage jobs in Norway. Erling Barth, Alexander W. Cappelen, and Tone Ognedal, “Fair tax evasion,” Memorandum No. 07/2006, Department of Economics, University of Oslo (2006), Online at:

  64. 64

    Pogge, “World Poverty”, op. cit., pp. 17, 116–18, 145–50.

  65. 65

    Richard Bird of the World Bank finds it surprising how resilient “the fiscal component of the ‘Washington consensus’ has proved to be […] in that the tax policies recommended to developing countries still largely follow the ‘broad-based, low-rate’ (BBLR) approach.” Bird, op. cit., p. 2. For example, a 2010 IMF working paper recommended that Mali reduce its mining royalty taxes from 6% to 3% of the value of gold production. Saji Thomas, “Mining Taxation: An Application to Mali,” Working Paper of the International Monetary Fund No. 10/126 (2010).

  66. 66

    Vanessa Barford and Gerry Holt, “Google, Amazon, Starbucks: The rise of ‘tax shaming’,” BBC News Magazine, December 4, 2012. Online at:

Published Online: 2014-2-19
Published in Print: 2014-5-1

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