We need a more sustainable and resilient economic system to protect both people and the planet

Close to half of Australia's biggest mining, energy, and water companies paid no tax in 2021–22. This is a BIG problem and grows worse every year.

The Australian Institute stated, "To be clear: the world cannot afford new gas projects (or any other fossil fuel projects) if we want to avoid dangerous climate change.” It has become abundantly clear that Australia’s policies are grounded in fossil fuel interests, not in decarbonisation.

"The facts are undeniable. This abdication of leadership is criminal,” said Guterres in a statement. “The world’s biggest polluters are guilty of arson against our only home.” The United States withdrew from the Paris climate agreement under Trump, who defined his approach to fossil fuel extraction as, “drill, baby drill.” Sadly, our situation is no different.

Instead of funding green technologies, our governments are building sea walls. The idea that billions of people can just adapt to worsening climate impacts is a “false comfort.” There is no way to ‘adapt’ to temperatures beyond human tolerance. In 2024, annual global warming reached a record 1.54°C above the preindustrial average, leading many parts of the world to experience unprecedented, catastrophic weather events.

A Disturbing Trend in Government Spending

We are now rapidly barreling toward 1.5 degrees. Yet last year, the Australian government provided $14.5 billion in subsidies to the fossil fuel industry and only $2.9 billion to renewable energy. We collect more from vehicle registrations than the gas industry pays in royalties, while 30% of these massive companies pay absolutely no tax. Those that do end up paying as little as 7%.

The Problems We Face

Some of the biggest problems in Australia are tax avoidance schemes and a lack of political transparency. To save our environment and economy, we urgently need to change the system, particularly in tax avoidance strategies and profit shifting. It’s not a funding problem; it’s a priorities problem. We need these companies to help pay for the transition to a better future.

Like Trump showed, continued wealth inequality in Australia has the potential to exacerbate social and economic issues. This impacts areas like access to education, healthcare, and affordable housing, especially for younger and lower-income Australians.

The Chain Reaction of Financial Inequality

Financial inequality harms both the financial system and the environment. Inequality leads to unsustainable consumption patterns that exacerbate environmental damage and undermine economic stability.

It's challenging to tax individuals effectively, as they might relocate to places like Dubai to avoid taxes. However, companies benefitting from our resources have no option to relocate. They should be paying our nation for extracting and profiting from our resources.

If we eliminated tax avoidance strategies and profit shifting, we could achieve far greater economic stability.

The Benefits of Enforcing Tax Justice

If tax justice were enforced on large corporations and billionaires:

• Everyone else could pay less tax.

• Public services would be better funded.

• Economic inequality would shrink.

  
  

The Economic Impact of Financial Inequality

1. Reduced economic stability:

High levels of inequality lead to increased consumption, borrowing, and risky investments. This creates potential bubbles and instability in financial markets, as evidenced by the 2008 global financial crisis.

2. Erosion of social cohesion:

Large income gaps can lead to social unrest, political polarization, and reduced trust in institutions, which can significantly impact long-term economic growth and stability.

3. Reduced investment in infrastructure:

When wealth is concentrated in the hands of a few, there may be less investment in essential infrastructure and social programs. This hinders overall economic development.

The Environmental Consequences of Financial Inequality

1. Increased consumption:

Donations from the BIG mining companies and the mega-rich influence government decisions, leading to increased investment in fossil fuels and harming our planet.

2. Unsustainable practices:

Economic activities driven by inequality result in unsustainable resource extraction, land degradation, and deforestation. The amount currently invested in green technologies pales in comparison to fossil fuel investments.

3. Climate change impacts:

Unless Australia slows down its fossil fuel investments and actively develops green technologies, the world will turn against us. Legal actions are already being considered against countries like Australia for negatively affecting poorer regions. This response – allowing them to migrate here – will lead to greater problems with our already degrading infrastructure and eroding lifestyles for everyday citizens.

4. Environmental injustice:

Disparities in environmental risks and access to resources can create a cycle of poverty and environmental degradation, meaning we will bear the brunt of these negative consequences.

Addressing financial inequality isn’t just about social justice. It’s about creating a sustainable and resilient economic system that can protect both people and the planet.

A Radical Proposal for Tax Equality

I propose that businesses refuse to pay their taxes until the fossil fuel industry also pays taxes. If billionaires and large corporations paid a minimum of 20% tax, we could reduce taxes for people and businesses earning less than $200,000 a year to just 10%. This would result in a more favorable environment than we currently have.

Current Tax Situation in Australia

• Small-to-medium businesses often pay close to the full corporate tax rate (25–30%).

• Large multinational corporations, especially in fossil fuels, mining, and tech, often utilize legal loopholes like transfer pricing, deductions, and debt loading to pay single-digit effective tax rates or less.

• High-net-worth individuals and billionaires frequently structure their income to avoid taxes using trusts, capital gains discounts, and offshore holdings.

  
  

A Simple Solution to Tax Inequality

Let’s assume:

• The top 10% of companies and billionaires paid a minimum 20% effective tax rate.

• This would significantly close much of the tax gap (estimated in Australia to be $50B+ annually due to corporate avoidance).

  
  

If this revenue were captured:

• We could cut income tax for individuals earning under $200K to 10%.

• We could reduce business tax for SMEs to 10–15%.

• AND still have more funding for services, infrastructure, healthcare, and education.

  
  

Collective Action Can Drive Change

Storing this in an offset account would ensure if done collectively — like a tax strike — it becomes a form of civil disobedience. This is a political strategy, not tax evasion, similar to how unions negotiate by withholding labor.

Such actions would:

• Pressure the government.

• Gain massive media attention.

• Risk audits and penalties, but send a powerful message: "We’re not avoiding tax — we just want fairness."

  
  

In conclusion, mobilizing towards tax justice is crucial for both our economic stability and environmental sustainability.

Author Sean Jacque Casten

Climate Change Advocate