[Christian Aid] COMPANY TAX DODGERS DERAIL BID TO END GLOBAL POVERTY

From Reuters Alert Net

World leaders will never meet their commitments to tackling global poverty unless poor countries are allowed to stop big businesses and rich elites from dodging tax and stealing wealth, says Christian Aid.

In the week the United Nations is examining progress towards its Millennium Development Goals (MDGs) in New York, a bold new report from Christian Aid shows how poorer countries are losing $500 US billion (£270 billion) a year in revenues to prosperous international tax dodgers.

In The Shirts Off Their Backs, Christian Aid warns unless massive gaps in poor countries’ revenues are plugged by responsible tax regimes, there is little hope that the MDGs will be achieved by the 2015 deadline set by the UN to halve world poverty.

‘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 MDGs. For decades, poor countries like Kenya and Bolivia have been haemorrhaging money to which they are properly entitled,’ says Andrew Pendleton, senior policy adviser at Christian Aid.

‘If these leaks could be plugged it would mean that poor countries would not have to be so reliant on hand outs that so often come with damaging strings attached.’

The report is published as part of joint work with the Tax Justice Network which today (Monday 12 September) releases a companion report entitled Tax Us If You Can.

Both works are highly critical of giant business conglomerates and some of the large international accountancy firms and banks – many of which are closely associated with Britain – who secrete company funds in tax havens outside the poor countries they are working in.

By using offshore banks, trust and companies, multinationals and some rich individuals avoid paying national taxes, thereby profiting from activities which foster poverty and undermine the notion of democracy.

‘Massive tax avoidance and illicit capital flight by companies and wealthy individuals in poor countries is costing the developing world US$500 billion per year in lost revenue – a sum that dwarfs annual overseas aid,’ said Andrew Pendleton.

The tax avoidance industry, which involves many financial services companies, is playing a major part in widening the gap between rich and poor and developed and developing countries, the reports state.

The sheer scale of the lost tax revenue this implies for governments around the world beggars belief. If spent on tackling poverty, the missing billions would more than plug the financing gap needed to achieve the Millennium Development Goals.

‘There is a crisis developing in poor countries as public services and infrastructure crumble because of a lack of public money. Tax avoidance by wealthy people and multinational companies is one of the main causes of this,’ said Andrew Pendleton. ‘Corrupt leaders, criminals and terrorists are hiding away their ill-gotten gains by piggybacking on the systems set up for tax avoidance.’