Christian Aid hits out at corporate tax abuse of the poor
The UK-based international development agency Christian Aid has accused transnational accounting firms of 'ripping off the poor' and undermining popular democracy in a hard-hitting new report.
Entitled The Shirt Off Their Backs, the report says that big companies are fostering tax avoidance on an international scale. It also claims that professional accountancy and legal institutions are showing indifference towards abuses of taxation law by member firms.
According to a parallel study by the Tax Justice Network, corporate tax avoidance and capital shift combined has resulted in a 500 billion US dollar loss in revenue to the developing world.
This is a sum which far exceeds the amount these same poorer countries receive in aid. It also undermines their capacity for sustainable production and trade.
Recently the international financial giant KPMG was forced into a 465 million US dollar settlement after it admitted selling unlawful tax shelter schemes costing the public billions of dollars.
Mike Rake, London-based chairman of KPMG International, told the Herald newspaper in Scotland that he was 'embarrassed ashamed' by the incident, although he went on to claim that such practices constituted a 'small, non-core' portion of the US firm's business.
The loss of revenue is especially damaging to poor countries because of its knock-on effect on shrinking levels of state support for social fabric and public works, an issue highlighted by the New Orleans hurricane tragedy.
'There is a crisis developing in poor countries as public services and infrastructure crumbles because of a lack of public money,' explains Andrew Pendleton, senior policy officer at Christian Aid. 'Tax avoidance by wealthy people and multinational companies is one of the main causes of this.'
'Tax is the forgotten issue in the debate about how to tackle poverty,' he told the BBC this week.
'Corrupt leaders, criminals and terrorists are hiding away their ill-gotten gains by piggybacking on the systems set up for tax avoidance,' continued Pendleton.
Tax havens are a huge part of the problem according to both Christian Aid and the Tax Justice Network, with the global financial services industry re-routing world trade through tax havens specifically for tax evasion purposes.
While some rich corporations have profited by around 11.5 trillion US dollars siphoned into tax havens, national governments have faced bills of some 255 billion US dollars, says Christian Aid.
Meanwhile the United Nations is on the threshold of a key development summit, at which some US government officials will reportedly be seeking to water down or strike out Millennium anti-poverty targets, backed by churches and other humanitarian groups.
Christian Aid now says there is little hope that these goals to halve world poverty will be achieved by the 2015 deadline.