Wednesday, May 15, 2013

Hunger: the hidden cost of tax injustice - new Christian Aid report

From Christian Aid, a new report entitled Who pays the price? Hunger: the hidden cost of tax injustice. An email from Christian Aid this morning said the report:

"makes the link between tax dodging, financial secrecy and hunger. It includes three country case studies from Ghana, India and El Salvador, where we identify measures that could be adopted by governments in these countries to increase tax revenues, reduce inequality and tackle hunger.

The report also contains two new pieces of research showing how developing countries lose more than the US50bn the FAO considers are required every year up to 2025 to tackle hunger.
  • The first, which I already shared some time ago, focuses on an Orbis-based research conducted on more than 1,500 MNCs operating in India and finds that MNCs with links to tax havens paid over 30 percent less in taxes than MNCs with no such links. See also Christian Aid's Occasional Paper, ‘Multinational corporations and the profit-shifting lure of tax havens,’ by Petr Jansky and Alex Prats.
  • The second reveals that developing countries could have lost over 2007-2010 as much as US578bn (that’s our upper estimate) of capital when trading with Switzerland, the country that sits at the top of TJN's 2011 Financial Secrecy Index. See Christian Aid's Occasional Paper ‘Swissploitation? The Swiss role in commodity trade’ by Alex Cobham with Petr Jansky and Alex Prats.
(TJN would add: those who are seriously interested in Switzerland's pernicious role in the global commodities trade are also advised to read the excellent report Switzerland's Most Dangerous Business, by The Berne Declaration of Switzerland. A significant sample of the book is available here.)

You can access a three-page report summarising the main new Christian Aid publication here. It contains startling facts such as this one:
"Had Zambia received for its copper exports in 2010 the same price Switzerland obtained when the copper was resold to other countries by Switzerland-based traders, it could have doubled its GDP."
The Christian Aid report contains this, in the introduction:
"Tax revenues are predictable and sustainable sources of income.They are fundamental to allowing developing-country governments to foster human development. But most poorer countries lack the staff, expertise and access to corporate information to counter activities such as transfer mispricing, in which some MNCs manipulate the profits they make and often hide them offshore.

In this report, Christian Aid provides new evidence of how an end to such practices, coupled with appropriate development policies, could make major progress towards eradicating world hunger. We realise that not all the revenues raised would automatically be channelled to priority areas such as health and nutrition.There are other priorities such as education and infrastructure. There also remain the challenges of corruption and government profligacy; challenges to which Christian Aid and our partners are rising. But without doubt, fairer tax systems and greater tax revenues could lead to increased practical measures to reduce food insecurity."

Now read on . . .


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