Incentives to lure businees, how should poor nations do it?

Tax breaks and other incentives go on all the time to get business to invest and build at a location. It's commonplace here in the states, but poor nations have to do it to. But is it fair to give these breaks to business while receiving aid from other nations?

A round table session took place recently that discussed these issues as a part of the recent development and trade meetings in Doha. The Citizen Newspaper of Tanzania says that poor nations were warned against giving too much to lure new investments.

The speakers said there was "no logic" in allowing undue tax concessions and then going around the world begging for aid.

Some called for the rationalisation of current packages and revisiting of regulatory regimes and policies backing them.

"There is need for caution regarding incentives for foreign companies to invest, as that would reduce the tax base, but income from capital should not escape tax regulations," former UN economy under-secretary Vito Tanzi said.

The gathering, which included government leaders, financial and development experts, NGOs and UN officials appealed for assistance to help LDCs retain and tax the profits attributable to them from multinational corporations (MNCs).

The International Trade Union Confederation (ITUC) said governments should establish or strengthen regimes that place the highest tax requirements on capital gains.

They should also tax the rich accordingly and provide tax relief for low-income families and the poor.