I would like a world where there was no need for development aid.
To say so is not to come over all Daily Express / Rees-Moggish all of a sudden. I have worked towards that aim for most of this century. This, at its core, is what tax justice is all about.
This is not a discussion of disaster assistance: that is quite another issue. I am talking about development here.
When John Christensen and I spent many hours about fifteen years ago discussing what tax justice was for and how we might achieve the goal our mutual interest in the needs of developing countries was a common focus. What we wanted was a world where aid was not needed. What we saw was a world where to that date the thinking on how to achieve this had not gone far enough.
At the turn of the century development agencies had tried aid. But sending resources was not enough.
And they'd campaigned on trade, but candidly they'd got most of the economics wrong.
And they had very successfully highlighted issues around debt, but that was to deliver a fix to an issue and not to create systemic reform.
What was needed was a mechanism to ensure that the so called developing countries could move on from aid and become the fully fledged, self-governing, democratic and self-supporting states that they deserved to be, that their people rightly demanded, and that anyone who respected them should wish for.
We were quite sure we had two mechanisms to deliver that. One was tax. The other was transparency. We wrapped them together under the banner tax justice. I wish I could say that the rest is history, but it's not yet.
The word 'yet' is right though. That is because the ideas that John and I created - first really summarised here and subsequently updated here - were deliberately and unambiguously designed to be the 'fourth leg' (after aid, trade and debt) of development, turning an unstable stool into a rock solid chair. We always intended to recruit development agencies to deliver our goals. We brought the ideas. They bought them and have become the delivery mechanism for tax justice.
And the aim is a post development world.
The goal was to make sure that the world became tax compliant.
We knew that in countries where many were too poor to pay tax that the contribution of multinational corporations was crucial. And we knew that they were not paying. Opaque accounting, the use of tax havens, transfer mispricing, and a corporate culture of greed that ignored the costs imposed on society meant that many multinational corporations were not paying their way to developing countries. Our aim was to make sure they did. Country-by-country reporting was and is the answer. It's working. But putting companies that were abusing on the front page of newspapers also helped, and we became quite good at that as well.
And we tackled tax haven abuse. Automatic information exchange from havens is now beginning to happen.
And we demanded data on who owned offshore companies. That's now happening, at least between tax authorities.
And we wanted data on trusts - which is a process also now underway.
Plus we demanded that the loopholes that let the wealthy off tax - from the UK's non-domicile rule onwards - be ended.
And we made clear that tax abuse must be a predicate offence for money laundering, and now pretty much everywhere it is.
So successful has this been that it is now much harder to hide the money corrupt elites steal. That was our aim.
And because 'following the money' is now so much easier something else is also now possible. The wealthy can be made to pay their tax. And not just income taxes. Wealth taxes can be collected as well now, because the money can no longer simply flow to a tax haven and be lost there, out of sight, any more.
I am not saying we've won as yet. But, working with partners - in the UK Oxfam, Christian Aid, Action Aid, Cafod, War on Want and others, including many across Europe - these changes have been delivered with the aim of helping developing countries build the post-aid world where they can collect what is due to them. And where they can beat large scale corruption. That's the great news.
But then some in the world began to notice a problem. This was that developing countries might gain, but the wealthy of the world would have to pay.
The tax haven that helped corruption was the same tax haven that hid the wealth of the global elite.
The transparency that ensured developing countries got their tax made sure that the CEO could not get their bonus by buying some tax abuse to inflate profits.
The opening up of secret companies and trusts has meant tax will be paid where it has not been before.
And now the backlash is beginning.
Oxfam is a victim of that. Of course it has made mistakes. But they do not justify the attack on it. That attack is in reality global wealth fighting back. The truth is that development agencies have been fighting the kleptocrats that Rod Liddle in The Times says cause poverty. The trouble is the techniques they use are the same ones that the wealthy use to avoid tax, and so perpetuate poverty. And when the wealthy find their interests and those of the kleptocrat coincide they're on the side of the kleptocrat.
Aid agencies have fought for tax and transparency as the means to build a post-aid world. And now wealth is fighting back. I guess we should have anticipated it. But the fight has to go on. Tax justice demands it.
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I agree – in particular with your first line.
The presence of an aid organisation in a country is a sign of failure to me. I’m more likely to tolerate them at a time of natural disaster but still.
You have to wonder what such a state does with its time and its money if it is not planning to help its people in the event of this or that. To some this may seem like a patriarchal or even matriarchal approach to ‘statehood’.
I’d just call it ‘good management’. And it is sadly lacking because it seems that too many states seem drawn to helping those who need it the least.
That post is spot on.
What’s more there’s another side to this. The rapid decline of the Murdoch Empire.
The last General Election revealed a massive decline in the political influence of the Daily Mail and Murdoch press. The same phenomenon has become apparent in Australia where Murdoch has a near monopoly on newspapers and over the past few years his influence on polls and electoral outcomes has plummeted to near zero.
They know this and have tried to compensate by becoming more extreme. That hasn’t worked. It is also also interesting to note that large sections of the Murdoch press make little money or run at a big loss (The Times included). They were being effectively subsidised by 21st Century Fox for the most part. Now that Murdoch has sold Fox to Disney these declining, loss-making entities face an imminent extinction and you can bet that they will go down screaming like they’ve got nothing to lose.
As they descend into a pile of toxic propaganda and hate it seems that they may be inclined to switch their attention from mainstream politics where they are now ineffective, to smaller, more vulnerable targets where reputations as not as easily ignored or defended .
We’ll see if this trend continues.
I was hoping you would be commenting on the following article this morning…
https://www.theguardian.com/commentisfree/2018/feb/12/treasury-tweet-slavery-compensate-slave-owners
I have to admit I’m struggling to get my head around the concept that:
I paid tax to pay off a debt incurred to pay slave owners to stop being abhorrent and let their slaves go. Then the slave owners decedents became law makers and have benefited from tax avoidance measures (for example https://www.theguardian.com/politics/2012/apr/20/cameron-family-tax-havens).
This is the real scandal where the rich and the powerful shape laws to keep the rich powerful. (like your headline says)
As you say “the fight has to go on. Tax justice demands it.”
Frankly humanity demands it!
I have run out of time Ken
There is a day job which is pretty demanding as well as this blog…..
I also think that any organisation who wishes to claim charitable status should be obliged to be transparent in where its funding comes from. Currently “charities” e.g. Lawson’s Global Warming Policy Foundation refuse to say where their funding comes from. It is an outrage. Strangely the Times / Telegraph appear more than happy with this situation.
I agree
and all think tanks too.
Ali, since when has the hypocrisy and cynicism of the hard right known any bounds? Use misdemeanours by a few Oxfam staff to attack a genuine charity like Oxfam because their work in development makes them question the wealth extraction of the global elite (cynicism); ignore the bogus charitable status of organisations set up to promote hard right free market policies, like Lawson’s ridiculous denialist ‘Foundation’, or the IEA.
If these organisations aren’t overtly political in their work, then who is? And of course, all these right wing think tanks refuse to reveal their sources of funding, whilst, according to Wikipedia: ‘The IEA has written policy papers arguing against government funding for pressure groups and charities involved in political campaigning.’
sickoftaxdodgers says:
Ah, but you obviously don’t understand common English usage.
Michael Flanders nailed this one in the early sixties in the intro to the Gnu song from ‘At the Drop of a Hat’. The refers to the council being strictly non-political – they’re ALL Conservative.
‘Political’ means ‘not of the Establishment’ therefore generally left wing (though UKIP may from time to time have been accused of having a political agenda).
By the same token ‘redistribution of wealth’ ONLY occurs from rich to poor. Wealthy elites, whether nations states or individuals never engage in redistribution what they do is ‘trade’ or ‘commerce’ or ‘financial services’ and is inherently immune from all criticism because it is inherently virtuous.
Government benefits are only paid to poor and feckless people. Wealthy people appearing fleetingly in the House of Lords on the way to their club (for example) are paid a per diem, or expense allowance or other euphemism.
In the beginning was the Word, and the Word was with God, and the Word WAS God.
Control the language and you control the world.
Richard,
I hope that the multinationals don’t just pass on their increased tax obligations to their employees ( in the form of lower wages or worse conditions) or their customers ( in the form of higher prices or lower quality). It’s what they would normally do after all!
You also highlight two policies needed to reduce the developing world’s dependency on aid. I am as certain as you are that the developing world would love a bigger share of the proceeds from growth, but I think they would welcome more of their products being bought by us in the developed world. Are there any barriers to that trade we could tackle?
There is no significant evidence that CT is passed on
If it was to be that would indicate monopoly power
The other measures should be taken
Richard,
If the people who write the cheque for Corporation Tax can inveigle someone else to actually pay it, why would they not? If the return on the capitalists’ investment in the Developing World is decreased by 20%, I imagine some will aim to increase prices, some will stint on say working conditions, and some will decide to sell up and reinvest elsewhere.
Of course, some capitalists will just smile and pay up.
In any case, I agree with you that the developing counties should just print any money they need. End of problem!
BTW, it seems to me that the Common Agricultural Policy is designed to actually keep developing countries products out, and hence dependant on our charity. Could you add campaigning to prevent UK consumers being discouraged from buying Developing Countries products to your list of measures to help the world’s poorest people?
Cofe
You are assuming in making your comments that there is no market
In that case the problem is not tax but exploitation
Re the CAP, sorry, there is only so much I can do
Richard
It looks at first glance as if you are more concerned with cleaning up the margin rather than addressing the problem. I understand that It is much easier to go after places such as Jersey, Switzerland and the Virgin Islands than with places of real inequality such as Zimbabwe or Saudi Arabia but I don’t see how tax and transparency help. After all, it is already clear what is happening in Saudi Arabia and Zimbabwe .
I am struggling to follow your logic
My point was that you are on this blog very interested in places such as Panama, Jersey, Liechtenstein, Switzerland etc but don’t spend much time looking at places such as Zimbabwe and Saudi Arabia, where there is wealth shared very unequally and where tax and transparency do not seem to be what is required to make these countries develop.
I think tax can do a lot
But I never claimed it could do everything
Especially in states like those
Disagree partially. If Angola had not found oil it would still be the basket case it was in the Seventies after Portuguese pull out. As it is even with substantial oil reserves it pis going the way of Nigeria and God forbid Venezuela.
Jose Magalhaes says:
‘As it is even with substantial oil reserves it pis going the way of Nigeria and God forbid Venezuela.’
The snippet I heard on Auntie Beeb in passing today suggested Venezuela was heading towards ‘Dollarisation’.
Another success for US foreign meddling. It’s taken a while, but it looks like another success for Langley.
Debt and interest; patents; structural adjustments; unequal treaties; WTO; World Bank; IMF; secrecy jurisdictions; transfer (mis)pricing; criminality and if all else fails, regime change. These all keep the poor in their place.
What we need is for people like you to bring down the people who control these large African states and make them work for the people.
“People like you”
Yes, get some bugger else to do it. WTF are you doing about it Graeme ?
Sweet Fanny Adams I expect.
Charity begins at home they say. So does criminality.