Trevor Manuel, South Africa's Finance Minister, is one of the rock stars of his profession. His keynote speech to the the world's tax experts at the latest OECD forum on Tax Administration in beautiful Cape Town are right on the money. Quoted in South Africa's Business Day, he said:

Smaller, poorer countries with tax administrations that are less sophisticated cannot be expected to develop the expertise required to unravel the complex structures that multinationals and other large companies put in place to minimise tax.

Although multinational enterprises are an essential element of the global economy, he continued, some engage in behaviour "aimed at one purpose - the minimisation of tax".

For the global trade system to work in the long term, everyone, including the multinationals, had to recognise that such behaviour was likely only to result in a backlash, a retreat to protectionism and inevitably to a world that was poorer.

What is more, he said, the tax policies of a single country, such as the steady downward adjustment in corporate tax rates -- could have negative consequences for tax administration globally.

He went on:

It must be of concern to policy makers and tax administrators that changes to tax policies have been a significant factor driving rising inequality in the world today . . . Our world needs a set of rules that are simple, transparent and equitable to differentiate legitimate competition between countries from the steps and measures that make tax evasion or avoidance easier.

It is, he continued, "imperative that we build relations with the taxpayer on the basis of … social responsibility." Accountants, lawyers, investment banks and financial advisers were increasingly engaged in "organised efforts" to find tax loopholes and undermine nations' tax bases.

As we know, the numbers involved are astronomical. Raymond Baker, a world authority on cross-border financial flows, has estimated that of the $1 to $1.6 trillion of illicit money that crosses borders annually, half-$500 to $800 billion a year-comes out of developing and transitional economies. As the Tax Justice Network has pointed out before, recent research has shown, for example, that sub-Saharan Africa is a net creditor to the rest of the world: its external assets, measured by the stock of capital flight, exceed external liabilities, as measured by the stock of external debt. The difference is that while the assets are in private hands, the liabilities are the public debts of African governments and their people.

Serious action on international taxation has the potential to do far more for the finances of developing countries than foreign aid, and would help lead poor countries away from aid dependency towards tax-financed self-reliance, with governments accountable to citizens, not to foreign donors.

Trevor Manuel is a man of great stature in the international financial community. Well said that man.

Hat tip: Tax Justice Blog