Focus: Corporate Responsibility - Tax dodging by companies 'hits the poorest hard'

Anita Pati, anita.pati@haynet.com

A report by Christian Aid says offshore tax havens siphon off £270bn a year from developing countries.

Christian Aid has criticised tax havens and international tax dodgers, claiming they siphon off £270bn pounds a year from developing countries.

In its report The Shirts off Their Backs: how tax policies fleece the poor, the charity says offshore tax havens have allowed multinationals, corrupt leaders, terrorists and criminals to "keep their wealth away from the prying eyes of national tax authorities".

The report argues that the 'dirty' money that flows through the global banking system from developing and transitional economies should be paid as tax and ploughed back into the infrastructures of poor countries.

Andrew Pendleton, senior policy adviser at Christian Aid and the report's author, said that as long as tax havens were allowed to shroud the origins of such dirty money, poor countries would continue to suffer.

"For decades, poor countries such as Kenya and Bolivia have been haemorrhaging money to which they are properly entitled," the report says. "If these leaks could be plugged it would mean that poor countries would not have to be so reliant on handouts that so often come with damaging strings attached."

The report adds that tax has so far been neglected in the fight against poverty because the debate has focused on debt cancellation and aid. It argues that "progressive forms of taxation" such as income tax, capital gains tax and taxes on profits make for more equitable societies in the developed world. However, low tax yields in poorer regions place limits on the amount of money available for essential services such as healthcare and education.

"Tax is the forgotten issue in the debate about how to tackle poverty and must be added to trade, debt and aid if the world is serious about meeting the millennium development goals," said Pendleton.

The report recommends that an international low tax threshold be introduced to stop tax competition between poor countries where corporations are offered "tax holidays" in return for their investment.

"We are asking for co-operation between different tax authorities to gradually lift the veil of secrecy," said Pendleton. "The challenge for companies is this: if you want to be socially responsible, you must show you've paid the appropriate amount of tax in the poor countries in which you operate."

The report was published in conjunction with the Tax Justice Network, an international coalition that campaigns for tax co-operation and against tax evasion and competition.

KEY POINTS

- Christian Aid has published a report claiming that corporations, corrupt leaders and criminals siphon off £270bn a year from developing countries that could be spent on alleviating poverty

- The Shirts off Their Backs: how tax policies fleece the poor says they hide their wealth in offshore tax havens

- The report says tax has been neglected in the fight against poverty while the debate has focused on debt cancellation and aid. It recommends more international collaboration between tax authorities - The report was published in conjunction with the Tax Justice Network.

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