Christian Aid's report Death and Taxes

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Christian Aid's recent report, Death and Taxes, exposes the role of multinationals in conning poor countries out of vital tax revenue.

It calculated that the poorest men and women in the poorest countries lose at least $160 billion a year in this way. This is substantially more than the $100 billion at present given in aid and would be enough to prevent almost 1,000 unnecessary child deaths each day.

The subprime crisis is driving policymakers to look again at regulatory measures. As before with the collapse of Northern Rock, the crisis drew attention to the "offshore engineering" that had effectively made it impossible for investors to accurately evaluate the assets and liabilities of the parent company.

The report highlights how this lack of transparency has resulted in secret deals between governments and mining companies in low-income countries. A particularly blatant example is that of Zambia, which agreed a royalty rate with mining companies of only 0.6 percent. This meant that in 2006, for example, Zambia received revenues of just £12 million while the companies produced £2 billion of copper. The International Monetary Fund (IMF) claims that 5 to 10 percent is the normal range for royalties.

The simple act of Christian Aid's partner organisations obtaining the secret documents and bringing them to public notice was enough to create massive political pressure for a renegotiation of the deals to benefit the people of Zambia. At present the mining companies are resisting. But it should not be necessary for civil society to undertake cloak and dagger operations to force politicians and multinationals to give some benefit of a country's finite natural resources to its own citizens.

The good news is that the situation is not hopeless. Britain's Department for International Development should continue to work to assist developing countries in strengthening their tax revenue authorities.

The British government should stop being an obstacle to multilateral measures that could ensure automatic information exchange between jurisdictions. Given that nearby half of the recognised tax havens are crown dependencies, overseas territories or Commonwealth countries, Britain is uniquely well placed to become a leader.

The other key international measure is to demand an accounting standard that mandates country by country reporting of economic activity, profits and tax paid, rather than simply a global consolidated account. Ultimately, a lack of transparency in financial markets facilitates abuse - of investors and individual taxpayers in the wealthy countries, and of the poorest people in the poorest countries. It's time to come clean.


Alex Cobham is Policy Manager at Christian Aid.

Death and Taxes is available at from Christian Aid's website.