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Promising news on tax justice

by
08 February 2013

There is now a window of opportunity for change, says Loretta Minghella

CHRISTIAN AID/CHARLES MARTIN

Campaign: Christian Aid's Tax Justice Bus reaches Durham, last october

Campaign: Christian Aid's Tax Justice Bus reaches Durham, last october

IT IS HARD to say without resorting to cliché, but there has never been a more exciting time to be a tax-justice campaigner. In the UK, the public, the media, and politicians are now wide awake to the fact that some very large, well-known, and successful companies here are paying extraordinarily little tax. When public funds are so short, they are understandably shocked, even when it seems that the companies may have obeyed the letter of the law. There is tremendous pressure for change.

But what is happening on the international front is potentially much more transformational. Along with others, Christian Aid has been campaigning for tax justice since 2008, and we have worked hard to highlight that tax-dodging is a problem for poor countries, too. They urgently need to collect more of the tax that is owed them, in order to overcome poverty and aid-dependence.

Now it seems as though our message is getting through to some powerful people. In his speech in Davos last month, David Cameron gave his clearest-ever recognition of the fact that poor countries face a fierce struggle to collect the tax revenues that their people need so badly. He also made it plain that the UK will use its G8 chairmanship this year to push for international action on tax evasion, aggressive tax-avoidance, and financial secrecy.

OF COURSE, words are not enough, even from prime ministers. Only changes in laws, and in corporate and individual behaviour, will produce a better world, in which the financially powerful fulfil their responsibilities to the rest of society. Obeying the letter of the law is clearly one of these, but from a moral perspective, the powerful also have a responsibility to contribute their fair share - and so to comply with the spirit of the law as well.

There are years of hard work ahead of us, but also reasons to be optimistic. In the latest development, more than 100 organisations are working together on the Enough Food for Everyone IF Campaign ( News, 25 January). Christian Aid, CAFOD, Tearfund, Islamic Relief, and the Jewish charity WJR are among them.

IF starts from the terrible fact that although there is enough food in the world for everyone, almost 870 million people are hungry, according to the UN's Food and Agriculture Organisation. The campaign is asking the UK and other governments to act on four fronts. They are: land grabs in poor countries (in which investors acquire large tracts of land, often at the expense of local people living in poverty); aid for poor countries; transparency from both governments and companies; and, crucially, corporate tax-dodging against poor countries.

I AM passionate about tax and transparency, because while aid is important, it alone cannot solve hunger. There is not - and will not ever be - enough of it, never mind the undesirability of countries' being dependent on, and beholden to, donors. Tax, however, has staggering potential: Christian Aid research suggests that developing countries lose perhaps $160 billion a year in revenues through corporate tax-dodging.

This is a scandal. The IF campaign is calling for two particular changes that would help. First, we want the British Government to use its Budget in March to require UK companies to reveal their use of tax-avoidance schemes that affect developing countries. We also want the UK to help those countries to recover any unpaid tax that is due.

Second, we are asking the UK to use its power when chairing the G8 to create a new international convention on tax transparency, of which G8 countries would be the first signatories. The convention would commit countries to creating public registries of who owns companies, trusts, and foundations. It would not allow people to hide behind anonymous shell companies in tax havens, as they do at present.

The G8 should also press tax havens to share more information with developing countries. In the past year, G8 countries have been increasingly effective at forcing havens to open to them; now we need the G8 to use that power to make sure all countries get the same benefit.

THE result would be a progressive ending of financial secrecy across the world, leaving tax-dodgers and others with money to hide with fewer and fewer hiding places. Both rich and poor countries would benefit.

Having worked in law-enforcement in financial services myself, I have some idea of how such a new convention could help. If you are trying to trace money across continents, then you need to know who is moving what to where, and who owns what. You also need the co-operation of your opposite numbers in other jurisdictions.

Critics may say: so what if poor countries' governments do collect more of the tax that they're owed - might they spend it on weapons, or siphon off some for their private gain?

Clearly, ending tax-haven secrecy will make it harder for the corrupt to hide money stolen from public funds. But to encourage governments to spend public money well, there must also be transparency around the payments that they are receiving from companies, and around how they spend tax revenues. The IF campaign is also promoting transparency.

Such public accountability, supported by a vibrant free media and civil society, and respect for free speech, is the best protection that citizens across the world have against governments misspending public money.

There are no guarantees of government wisdom and propriety, anywhere in the world. But to argue that we should therefore abandon work to make companies pay their taxes is a counsel of despair, and an acceptance of a planet deeply scarred by suffering and injustice. The world can do dramatically better than it does today. I urge you to join the IF campaign.

Loretta Minghella is the director of Christian Aid (www.christianaid.org.uk; www.enoughfoodif.org).

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