‘Dealing with developing countries’ corporation tax gap alone could raise enough public revenues to save the lives of 230 children under the age of five every day,’ say campaigners
More than 100 organisations, including the Church of England and leading charities, are backing a new campaign to lobby governments to stop big companies ‘dodging tax’ in developing countries, as the UK prepares to host this year’s G8 summit.
Tax is one of four strands – aid, land, tax and transparency – to the Enough Food for Everyone IF campaign, which calls for a new ‘transparency convention’ to shine a light on tax haven secrecy.
Existing initiatives have left the problem largely untouched, campaigners said, despite the current rhetoric. The tax debate has gathered pace in the last few months and the campaign is likely to command widespread support, although the UK government and some tax experts may well challenge its estimates of the impact of evasion and avoidance.
The campaign’s backers include Christian Aid, ActionAid, CAFOD, Oxfam, the Church of England, Islamic Relief, Save the Children and Comic Relief. The actor Bill Nighy, Olympic swimmer Mark Foster and Harry Potter star Bonnie Wright are among its celebrity supporters. Bill Gates addressed the launch in a pre-recorded video message.
Archbishop Desmond Tutu has also backed the campaign. ‘Hunger is not an incurable disease or an unavoidable tragedy. We can make sure no child goes to bed hungry,’ he said. Campaigners say that while ‘great strides’ have been made in reducing poverty, hunger is ‘threatening to reverse these achievements’.
The campaign calls on the UK government to enshrine in law its commitment to provide 0.7% of UK GDP in aid. It calls for targeted investment in small-scale farmers, who ‘provide food for a staggering one third of the human race’. Governments and companies ‘must be honest’ about their role in the food system, the campaign adds.
A new convention on tax transparency would ‘reinvigorate the global challenge to tax havens’, preventing companies and individuals from hiding wealth by initiating a global standard for public registration of ownership of companies and trusts.
Corporate tax gap
‘Public finance is crucial to combatting hunger, and taxes are the most important, sustainable and predictable source of finance for all governments including in developing countries. African countries with broader tax bases have lower levels of undernourishment,’ the campaigners said in a report titled ‘Enough food for everyone: The need for UK action on global hunger’.
‘However, multinationals are able to avoid paying taxes due in developing countries, particularly by using tax havens, creating artificial corporate structures to shift profits away from the real locations of economic activity.’
‘The sums involved are large,’ the report added. ‘The OECD estimates that developing countries lose three times more to tax havens than they receive in aid each year.’
It claimed that dealing with developing countries’ corporation tax gap alone could raise enough public revenues ‘to save the lives of 230 children under the age of five every day’.
It called on the UK government to introduce country-by-country reporting for all sectors within the G8’s jurisdiction and push for country-by-country as a new global accounting standard.
The report’s contributors include David McNair, head of growth, equity and livelihoods at Save the Children UK. HMRC announced on Friday that McNair, a former adviser to Christian Aid, has been appointed to the UK’s interim general anti-abuse rule (GAAR) advisory panel.
Writing on The Guardian website last week, McNair identified several countries whose ‘tax effort’ was weak.
‘In 2009, for example, countries such as Burundi, Democratic Republic of Congo, Ethiopia and Guinea Bissau collected as little as $35 per person through tax – hardly enough to provide the services needed to improve maternal mortality or provide universal education.’
In some resource-rich countries, he said, the problem was ‘not the amount of money available to the government, but the way it is managed’.
Profit shifting
During a House of Commons debate on tax and development on 17 January, international development minister Lynne Featherstone said, that along with France and Germany, the UK was providing additional resources to the OECD to ‘speed up the international efforts on dealing with profit shifting by multinationals and erosion of the corporate tax base at global level’. The OECD will report to the G20 next month on actions to tackle the issues of base erosion and profit shifting, she said.
Sir Malcolm Bruce, chairman of the Commons international development committee, said recent controversies had shown ‘how difficult transfer pricing is for a country such as the UK’. The issue was, however, ‘ten times more difficult for small developing countries with virtually no capacity’.
A report prepared by PwC in Belgium for the EC in 2011 found that about two-thirds of business transactions worldwide take place within a group of companies, and many developing countries capture only 40% of their tax potential.
'230 children under the age of five every day’
‘This estimate has been made by combining available tax revenue data from all developing countries and the smallest (most conservative) of the tax gap estimates compiled by four revenue authorities. This suggests that a typical corporation tax gap is some 20% of corporation tax take, which is also consistent with, firstly, the proportion of profit-shifting in specific multinational groups whose developing world tax avoidance we have investigated; and, secondly, the corporation tax loss from transfer pricing abuses in developing countries estimated by PwC for the EC.
‘This “tax gap” figure has been combined with coefficients derived from a regression analysis of the relationship between government revenues (including tax and aid) and under-five mortality, to determine the likely impact of increased tax revenues on under-five mortality across all developing countries, assuming that current spending patterns continue. Full details of this calculation are available on request.’
Source: ‘Enough food for everyone IF’
‘Dealing with developing countries’ corporation tax gap alone could raise enough public revenues to save the lives of 230 children under the age of five every day,’ say campaigners
More than 100 organisations, including the Church of England and leading charities, are backing a new campaign to lobby governments to stop big companies ‘dodging tax’ in developing countries, as the UK prepares to host this year’s G8 summit.
Tax is one of four strands – aid, land, tax and transparency – to the Enough Food for Everyone IF campaign, which calls for a new ‘transparency convention’ to shine a light on tax haven secrecy.
Existing initiatives have left the problem largely untouched, campaigners said, despite the current rhetoric. The tax debate has gathered pace in the last few months and the campaign is likely to command widespread support, although the UK government and some tax experts may well challenge its estimates of the impact of evasion and avoidance.
The campaign’s backers include Christian Aid, ActionAid, CAFOD, Oxfam, the Church of England, Islamic Relief, Save the Children and Comic Relief. The actor Bill Nighy, Olympic swimmer Mark Foster and Harry Potter star Bonnie Wright are among its celebrity supporters. Bill Gates addressed the launch in a pre-recorded video message.
Archbishop Desmond Tutu has also backed the campaign. ‘Hunger is not an incurable disease or an unavoidable tragedy. We can make sure no child goes to bed hungry,’ he said. Campaigners say that while ‘great strides’ have been made in reducing poverty, hunger is ‘threatening to reverse these achievements’.
The campaign calls on the UK government to enshrine in law its commitment to provide 0.7% of UK GDP in aid. It calls for targeted investment in small-scale farmers, who ‘provide food for a staggering one third of the human race’. Governments and companies ‘must be honest’ about their role in the food system, the campaign adds.
A new convention on tax transparency would ‘reinvigorate the global challenge to tax havens’, preventing companies and individuals from hiding wealth by initiating a global standard for public registration of ownership of companies and trusts.
Corporate tax gap
‘Public finance is crucial to combatting hunger, and taxes are the most important, sustainable and predictable source of finance for all governments including in developing countries. African countries with broader tax bases have lower levels of undernourishment,’ the campaigners said in a report titled ‘Enough food for everyone: The need for UK action on global hunger’.
‘However, multinationals are able to avoid paying taxes due in developing countries, particularly by using tax havens, creating artificial corporate structures to shift profits away from the real locations of economic activity.’
‘The sums involved are large,’ the report added. ‘The OECD estimates that developing countries lose three times more to tax havens than they receive in aid each year.’
It claimed that dealing with developing countries’ corporation tax gap alone could raise enough public revenues ‘to save the lives of 230 children under the age of five every day’.
It called on the UK government to introduce country-by-country reporting for all sectors within the G8’s jurisdiction and push for country-by-country as a new global accounting standard.
The report’s contributors include David McNair, head of growth, equity and livelihoods at Save the Children UK. HMRC announced on Friday that McNair, a former adviser to Christian Aid, has been appointed to the UK’s interim general anti-abuse rule (GAAR) advisory panel.
Writing on The Guardian website last week, McNair identified several countries whose ‘tax effort’ was weak.
‘In 2009, for example, countries such as Burundi, Democratic Republic of Congo, Ethiopia and Guinea Bissau collected as little as $35 per person through tax – hardly enough to provide the services needed to improve maternal mortality or provide universal education.’
In some resource-rich countries, he said, the problem was ‘not the amount of money available to the government, but the way it is managed’.
Profit shifting
During a House of Commons debate on tax and development on 17 January, international development minister Lynne Featherstone said, that along with France and Germany, the UK was providing additional resources to the OECD to ‘speed up the international efforts on dealing with profit shifting by multinationals and erosion of the corporate tax base at global level’. The OECD will report to the G20 next month on actions to tackle the issues of base erosion and profit shifting, she said.
Sir Malcolm Bruce, chairman of the Commons international development committee, said recent controversies had shown ‘how difficult transfer pricing is for a country such as the UK’. The issue was, however, ‘ten times more difficult for small developing countries with virtually no capacity’.
A report prepared by PwC in Belgium for the EC in 2011 found that about two-thirds of business transactions worldwide take place within a group of companies, and many developing countries capture only 40% of their tax potential.
'230 children under the age of five every day’
‘This estimate has been made by combining available tax revenue data from all developing countries and the smallest (most conservative) of the tax gap estimates compiled by four revenue authorities. This suggests that a typical corporation tax gap is some 20% of corporation tax take, which is also consistent with, firstly, the proportion of profit-shifting in specific multinational groups whose developing world tax avoidance we have investigated; and, secondly, the corporation tax loss from transfer pricing abuses in developing countries estimated by PwC for the EC.
‘This “tax gap” figure has been combined with coefficients derived from a regression analysis of the relationship between government revenues (including tax and aid) and under-five mortality, to determine the likely impact of increased tax revenues on under-five mortality across all developing countries, assuming that current spending patterns continue. Full details of this calculation are available on request.’
Source: ‘Enough food for everyone IF’
