Those big tax justice numbers, again

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I wrote yesterday on an new report from Maya Forstater for the Center for Global Development on whether or not the tax lost to developing countries as a result if illicit financial flows was of the scale many NGOs have reported.

The blog had more readership than I expected on a day when Greece dominated, but then the issues is of significance, not least because the whole issue is under debate in Addis Ababa right now so I thought I should draw attention to three developments.

First Maya responded.

Second, I replied, as unimpressed by her response as I was by the report in the first place.

The exchange is, I suggest, worth reading, in particular for this bit where I look at a very odd claim by Maya, saying:

Finally, .... I have not done the cost benefit [on the trade off between $1 in the hands of a multinational company  and $1 in the hands of the poorest in a developing country]. I seriously doubt anyone could, precisely, because the data to make such comparison would be nigh on impossible to find, but this does not for a moment discredit the obvious theoretical point which is fundamental to most standard economic think that I made, in which it would be considered self-evidently true. Apparently you disagree on that point, and you do so in the most spectacular fashion saying:

The question is not about comparing the marginal utility of $1 in the hands of government vs $1 in the hands of a business, but about the dynamic impacts on investment.

With the greatest of respect how did you reach that conclusion? Since when were development agencies in the business of promoting inward investment whether or not it added value to the people of the country where it might occur, as you very clearly imply you think is their job?

It seems to me that Maya has laid her cards on the table: the difference of view on display is about whether you think the interests of big business or ordinary people are more important. I know what I think. It seems pretty clear what Maya thinks.

But more importantly, so is Alex Cobham's response significant as he was one of those who Maya said she consulted, although as he points out, he pulled out of that process because, as he puts it:

I’m afraid it seems as if the results of the research exercise were pre-determined.

Alex and I wrote entirely independently. We come to similar conclusions, wondering in the first instance what this research is supposed to show, sharing serious doubts about its methodologies, evidence and claims, and finally wondering what the supposed actions that should flow from it are meant to be. If the aim is to undermine the work of NGOs on illicit financial flows the timing of the release could not be more cynical as the Financing for Development conference is now taking place in Addis. If that was not the aim, then what is desired is not clear.

The impression is that this is either a well aimed, but very poorly executed piece of corporate propaganda or a poorly done and badly timed piece of research that has fails in almost every respect. I'd rather hope it was the latter. But I am ever the optimist.