Poor Nations Losing Billions To Tax Avoidance, Claims Charity

by Robert Lee, Tax-News.com, London

13 September 2005

Poor countries are losing hundreds of billions of dollars in revenue as a result of tax avoidance by rich individuals and multinational companies, according to a new briefing paper by the charity Christian Aid.

The briefing, entitled: 'The Shirts off their Backs,' claims that poorer countries are losing US$500 billion a year in revenues to wealthy individuals and international entities using tax avoidance strategies. It warned that the United Nation’s poverty targets will be missed unless international action is taken to bring about more responsible tax policies.

The report is being published alongside 'Tax us if you can', a report from the Tax Justice Network, a Christian Aid partner, which targets multinational companies, the accountancy industry and banks for their part in undermining taxation in the developing world.

"Tax is the forgotten issue in the debate about how to tackle poverty and must be added to trade, debt and aid if the world is serious about meeting the MDGs. For decades, poor countries like Kenya and Bolivia have been haemorrhaging money to which they are properly entitled," commented Andrew Pendleton, senior policy adviser at Christian Aid and the briefing’s author.

He added that:

"If these leaks could be plugged it would mean that poor countries would not have to be so reliant on hand-outs that so often come with damaging strings attached.

"Massive tax avoidance and illicit capital flight by companies and wealthy individuals in poor countries is costing the developing world US$500 billion per year in lost revenue – a sum that dwarfs annual overseas aid."

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