Monday, October 27, 2008

Analysis of the EU preparations for the next Doha meeting

The next big international meeting on development and trade is coming up in December in Doha, Qatar.

The meetings sponsored by the United Nations hope to develop finance for the world's poor. But the recession felt thought the world may carry the agenda instead.

A great article today in IPS talks about the preparations that EU member states have put into the upcoming meetings. Writer David Cronin gathers the opinions of aid groups and NGO's on what the European Union is doing.

For past meetings similar to this, the EU was widely praised for their leadership, but now they are being criticized.

Last week Jeffery Sachs gave what he would like to see on the meetings agenda.

Today, we wanted to highlight the subject of tax havens from the IPS article.

One of the most contentious issues on the Doha agenda concerns how taxation regimes in Europe are depriving poor countries of sorely needed resources.

A new report by the Centre for Research on Multinational Corporations (known by its Dutch acronym SOMO) in Amsterdam notes that revenue generated from tax accounted for just 13 percent of national income in countries classified as low-income in 2000. By contrast, the average level for industrialised countries belonging to the 30-member Organisation for Economic Cooperation and Development (OECD) was 36 percent.

Estimates for the amount of money that poor countries lose as a result of capital flight -- the expatriation of taxable revenue -- vary from 350 billion dollars to 500 billion dollars per year, several times more than what those countries receive in development aid. A large amount of this 'hot money', as it is sometimes called, ends up in tax havens either on EU territory or on territories answerable to its member states. Such havens include the City of London, the Cayman Islands, the Channel Islands, Cyprus and Luxembourg.

To remedy this situation, anti-poverty campaigners are demanding a crackdown against these tax havens, as well as the establishment of robust international accountancy standards that require major firms to report precisely how much they earn in every country where they operate, and what they do with the sums involved.

These calls are being resisted by treasury officials in Britain, who are eager not to subject the City of London to rigorous controls.

"Closing down tax havens is a European responsibility," said Molina. "Many of the tax havens are in European jurisdictions."

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