This week, France, following similar moves by Poland and Denmark, announced that companies that base their headquarters or subsidiaries in offshore tax havens will be barred from receiving aid from its coronavirus bailout. Denmark went a step further by stating that no aid would go to any company that pays out dividends or engages in stock buybacks, practices that have been increasingly criticized from the U.S. airline industry to the UK’s financial sector. The former, which has requested $50 billion in bailout, has spent $45 billion in recent years on share buybacks, a move that is often used to make a company’s stock appear more attractive by increasing its share price, and which primarily benefits its executives and investors. For the financial sector, the criticism stems from their dividend payments in the months before the 2008 financial crisis, in which they received the biggest bailout in history.
According to the ICIJ, “now that governments are facing an economic meltdown, they are confronted with a reality that many economists and tax justice advocates have been warning about for a long time: more than $800 billion in lost tax revenues, annually.” For developing nations, some of which are ill prepared to deal with a pandemic of this scale, the revenues lost can amount to staggering 7% of their GDP!