TAX AVOIDANCE 'KEEPS DEVELOPING WORLD POOR'

By Paul Owen and agencies, The Guardian Unlimited, UK, September 12, 2005

Multinational companies operating in the world's poorest countries are "dodging" around £270bn a year in tax, anti-poverty campaigners claimed today.

By not paying the taxes, rich businesses are depriving developing countries of much needed revenue, according to a report by Christian Aid.

Andrew Pendleton, a senior policy advisor for the charity, said the scale of the lost revenue "beggars belief".

The report names no names but says leading accountancy firms, banks and business conglomerates with close links to the UK were implicated.

The study says the businesses are secreting money in offshore banks, trusts and companies, creating tax havens away from Britain.

It argues that the shortfall means the developed world will never achieve its stated aim of reducing world poverty. The report coincides with the UN's review of its Millennium Development Goals (MDG), which is taking place in New York.

It argues that responsible tax regimes must be put in place in order to help achieve the MDG aim of cutting poverty by half by 2015.

"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," Mr Pendleton said.

"For decades, poor countries such as Kenya and Bolivia have been haemorrhaging money to which they are properly entitled.

"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."

Mr Pendleton said the £272bn the multinational corporations and rich individuals avoided each year dwarfed the annual amount of annual overseas aid.

"The sheer scale of the lost tax revenue this implies for governments around the world beggars belief," he said.

"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. Corrupt leaders, criminals and terrorists are hiding away their ill-gotten gains by piggybacking on the systems set up for tax avoidance."

The Christian Aid report is being published in conjunction with the independent group the Tax Justice Network.

http://society.guardian.co.uk/aid/story/0,14178,1568255,00.html