Christian Aid issued the following press relase within the last hour:
Christian Aid today welcomed Prime Minister David Cameron's backing for legislation that will force companies to reveal the taxes and fees paid to governments in every country where they operate.
Speaking in Lagos, the Prime Minister said the EU should follow the example of the US, which has introduced a new law to force mining and oil companies to be transparent about their payments to the regimes where they are extracting wealth.
Christian Aid believes that measures taken by companies trading internationally to conceal their profits and shift them off-shore where little or no tax is payable deprives developing countries of at least $160bn in lost tax revenues each year.
Dr David McNair, Christian Aid's Senior Economic Justice Adviser, said: ‘The Prime Minister's call is very welcome. It follows other remarks he has made during his trip highlighting the importance of effective tax systems as a means of enabling developing countries to achieve economic independence.
‘The amount at present lost to developing countries through tax dodging by companies trading across borders is one and a half times the amount rich countries contribute in aid every year.
‘Requiring companies to reveal what they pay with regard to each project they undertake is one step towards curtailing such widespread tax abuse, and will help prevent the bribing of politicians to secure contracts.
‘But EU legislation needs to go further. In order to ensure companies are paying the right amount of tax, we need more information on how the taxes they do pay relate to the profits they make.
‘The money lost to poorer countries through tax dodging could make a significant difference to services such as health and education in the countries affected.'
Christian Aid also welcomed the Prime Minister's call for greater economic integration between African countries, and increased investment in infrastructure as other essentials towards greater economic self-reliance.
Likewise, the Prime Minister's restatement of his government's pledge to increase the aid budget substantially was warmly welcomed given the continuing needs of developing countries.
I welcome the Prime Minister's comments. I welcome Christian Aid's comments.
The time for country-by-country reporting has come.
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Likewise i applaud these efforts. BUT When will we get tax and commercial transparency WITHIN the UK and EU as well as the USA and a return FROM GRANTS ENABLED by STIMULATING THE RIGHT AREAS thereby allowing Money Creation for those who wish to work? SUCH AS (as we have said before here) to invest in the USEFUL and DURABLE investment of SUPER-INSULATION and RE-CLADDING of EXISTING BUILDINGS externally both INSIDE the UK and BEYOND to reduce WASTAGE of oil and gas AND DEPENDENCY on the TEAT of big government and BIG ENERGY. Surely anyone with any sense – reading your correspondents comments about melt-down, and hearing politicians’ COMPLACENCY (that they will get out of these woods BY INFLATING AWAY THE VALUE OF THE uk’s GBP) penalising savers by govt/bank of England NOT setting a FLOOR on BASE RATES below which banks could not pay.
Richard – What is wrong with the idea of Diverting AT LEAST THE INTEREST on new money created by the commercial banks – surely in the over the long term GOVERNMENT DEBT WOULD BECOME MANAGEABLE? Could this not also help to FACILITATE such grants AND THUS STIMULATE THE RETRO-FIT INDUSTRY without having to knock down large numbers of buildings – which is an energy-intensive process? Surely a way to get our balance of payments better is to reduce the energy costs (and reduce fuel poverty – a vote-winner).
Kind regards to all your readers
Ian.greenwood[at]phonecoop.coop
Your country-by-country reporting is a Good Idea in theory but will enrich the Auditors by more than it enriches the LDCs. Last year Lloyds Bank (the first R&A to hand) paid its auditors £40m – adding all this detail will add billions to the cost of auditing public companies and you would need a score of people like me working full-time just to check whether any public company had suspicious data and whether the import/export data reflected commercial realities or tax planning – e.g. forty years ago 90% of Glaxo’s production was in the UK and 90% of sales were overseas, but once shipping costs exceeded the differential between mass production in the UK and medium-sized production in Singapore it moved some production there so now GSK Singapore has exports many times its local sales for operational (highly educated and skilled population, shipping hub for Pacific and Indian Oceans) rather than tax reasons. Meanwhile the only effect on private companies with no shareholders outside the families of the founders and executives will be higher audit fees.
Although a little away from the point of this, I have a more general point to make on tax evasion. I believe that most of the population do not actually know exactly how it is that tax is avoided or evaded by the use of tax havens, and therefore cannot feel as engaged with the issue as they otherwise might. The use of sham offshore companies where control and management is deceptively claimed to take place — and then “proved” by voluminous fake minutes of fake board meetings is just one example of how this all works. That is, the abuse of the HMRC “non-UK residency company” status. Have you thought of producing a simple guide for the layman along the lines of “How to Evade Tax” or “A Dummies Guide to Tax Avoidance”? If this information were to be put into the public domain with some clarity then it might help to make it harder for corporations (big or small) to get away with it.
You are so right but, even worse than this, many people do not know the effects of evasion and avoidance. I have often seen local newspaper blogs written where readers seem to think big business is just doing what it can and this is okay – “more power to them”! As if it were something to be congratulated on – with no comprehension of the damage being done. Sadly, it is often the people most in need of ethical tax payment/ welfare etc that have this attitude. I feel sure that if everyone knew what is rippped off the people of developing countries in comparison to what we raise in charity for the same peoples and if everyone understood that taxes pay for the very things being cut and taken away from us right now, we could have a much louder voice.
Education is key