Friday, 24 February 2012

Tax-dodging robs the poor

Does tax-dodging rob the poor? I'll begin with a disclaimer. I can barely understand my own tax position. I'm not an economic or tax expert, so what I write could be challenged if you think you know better. But it's written in good faith based on information from organizations I respect.


Does tax-dodging rob the poorest people in the world? Yes, I think much of it does.


A significant means of tax dodging is by using tax havens which thrive on secrecy and allow companies to pay no or minimal tax. There are at least 60 tax havens in the world. Most have high levels of financial secrecy and no or minimal levels of tax. On paper more than half of world trade passes through tax havens. Multi-national companies often use tax havens for legitimate reasons, but many use them to secretly hold huge sums that would attract tax in other countries. Christian Aid's Tax Haven Briefing uses a simple example of a banana to explain how this works. 


On day 3 of Christian Aid's 'Count Your Blessings' in Lent 2012 the theme is tax-dodging and how this adversely affects the world's poorest people. Christian Aid asserts that
"Tax dodging by some unscrupulous companies means developing countries lose more money annually than they receive in aid."
You can read more about this at Christian Aid's 'Trace the Tax' campaign page. This campaign challenges the financial secrecy that prevents poor countries collecting the taxes they are due. 


War on Want states that developing countries lose an estimated £250 billion every year as a result of corporate tax-dodging. This is enough to meet the UN Millennium Development Goals several times over. Tax dodging and uncollected tax in the UK amounts to £120 billion a year, enough to double the funding of the National Health Service.  It's the poor who suffer most from this, since tax enables governments to fund public services that provide clean water, health care, education etc.


I realize this is a complex ethical and financial issue but for some reason Jesus' words about the judgement of the nations comes to mind: Matthew 25: 31 - 46.


Christian Aid suggest you give 50p today if you have benefited from a tax-funded service in the last year. I've benefited from several. How about you?


Image: Photo Rack


4 comments:

  1. We're following Christian Aid's Count Your Blessings with us this Lent as a whole family. It's a great opportunity, especially for the kids, to consider just how wealthy we are and how much freedom we have in this country. Most of this we just take for granted. Christian Aid have done a really good job with this.

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  2. What a good idea Gillan. I chose to follow the Count Your Blessings programme this Lent as a way to open my eyes more to things beyond the local, parochial or national and to look for good news stories across the world - along with the bad news. I decided to post on this every day in Lent (except Sundays) as a discipline to make sure I took time to count my blessings and consider the issues Christian Aid's Lent calendar raises.

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  3. We need to stop some unscrupulous firms dodging tax and our biggest companies can help us: they have the power to help change global accounting rules, so that poor countries can trace the taxes they're owed.
    Josh Gonze

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  4. Josh - I agree that the biggest companies have the power to help change global accounting rules, but I can appreciate what a risky step when getting the best profit for shareholders has become such a key consideration.

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