Aid agencies support British campaign on corporate tax avoidance

By staff writers
February 5, 2009

Two major UK-based international development agencies have welcomed a British newspaper's campaign on corporate tax avoidance, which they point out is unjust and hits the world's poor badly.

Christian Aid and ActionAid say they are "delighted" that the Guardian has begun an expose of firms' secret tax avoidance schemes, which also cost the UK billions of pounds.

The agencies say: "As two of the UK's biggest development NGOs, we are working together to highlight the extent to which the same practices rob poorer countries of desperately needed funds to finance their development and deal with the financial crisis.

"Christian Aid estimates, on the basis of figures quoted by the World Bank, that corporate evasion through abuses of trade pricing costs developing countries around $160bn each year - which if spent according to current patterns would, among other things, avert the deaths of around 1,000 children under-five every day."

Alex Cobham of Christian Aid and Anna Thomas of ActionAid continue: "Our analysis also shows that the same lack of transparency and use of tax havens that make these abuses possible are also responsible for the financial crisis which is now hitting the poorest hardest."

"Leading politicians from France and Germany are now joined by a US president who is committed to tackling these abuses," they point out.

They conclude: "We very much hope the Guardian campaign will help to change the position of the UK government, which is beginning to look like the last great defender of opaque financial markets - and all their costs."

PM Gordon Brown pledged yesterday to work for an international clampdown on tax avoidance, but was accused by the Liberal Democrats of having presided over its expansion through insufficient regulation.

Official estimates put UK corporate tax avoidance at up to £10 billion annually. A Trades Union Congress (TUC) suggest the figure may be nearer £12 billion: the equivalent of one of Chancellor Alistair Darling's anti-credit crunch fiscal stimulii every other year.

The newspaper says: "Tax avoidance techniques are usually perfectly legal, if fiendishly complex. Thousands of lawyers and accountants earn bankers' salaries dreaming up schemes to exploit loopholes in tax law, reducing their clients' tax bills below levels intended by legislators and understood by the public as generally applying to the richest corporations.

"But this very complexity, the absence of adequate tax reporting even for publicly quoted companies and the secrecy of a government seemingly unwilling to confront the scale of the problem, conspire to keep corporate tax avoidance a largely hidden scandal."

However, it has been suggested that the Guardian Media Group itself paid tax at an effective rate of just 4.99 per cent in 2008. It has also set up an offshore company in the Cayman Islands to avoid the payment of stamp duty.


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