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Christian Aid Takes On Corporate Tax Dodgers

Christian Aid Takes On Corporate Tax Dodgers

money treePoverty exists in every country in the world. In many countries most of the population live on less than $1 a day, while others have abundant wealth. About 50% of the world's population – some 3 billion people – live in absolute poverty, lacking clean water, healthcare, housing and an adequate diet. When disaster strikes, as in West Africa recently, poverty means hunger, starvation and death.

We in the rich world do care – we give millions of dollars through hundreds of charities every year. Our governments give economic aid to the poorest countries. The UK government has even protected its aid budget against cuts – much to the disgust of many who see aid money as a waste. "We give year after year," they say, "and the situation just gets worse."  They have a point.

Most of the major aid charities (or NGOs) in the UK have started to change tactics in recent years. They still send donations to poor countries for healthcare, education, water projects, etc. but at the same time they have begun to attack the root causes of poverty. This can take many forms because there are many root causes. But one factor is so huge that addressing it could make a real difference to world poverty.

Do you pay tax? If you have an income, or ever buy anything, or drive anywhere – you have to pay tax. Countries couldn't function without it. We may not like everything that it's spent on – wars for instance – but we understand why tax is necessary. And we expect the wealthy to pay more tax than those on low incomes. So why do we tolerate a situation in which multinational corporations are able to get away with paying as little as 1% tax on their profits? How to they do it? They rely on a complex system of trades and charges, many involving partner or subsidiary companies in tax havens across the globe. Christian Aid, one of the UK's leading anti-poverty charities, is calling for greater transparency about the profit companies make and the tax they pay in each of the countries in which they operate. Without such transparency it is impossible for poor producer countries to claim the tax to which they are entitled. This video shows how such schemes work.

If producer countries received the tax to which they are entitled the need for aid handouts could be eliminated and money would be available for health, education, infrastructure and everything else that we expect our taxes to be used for. Much of the problem is caused by countries like Switzerland which allow companies and individuals to shelter their profits in complete secrecy. The UK government has just reached a deal with the Swiss government whereby the Swiss have agreed to make a one-off deduction from all existing accounts held by people who are liable for British taxes but have not paid them. The tax grab could raise as much as £5 billion for the Treasury and will be applied in 2013.

That's great for the British (although Richard Murphy, director of Tax Research UK thinks it's a poor deal) but where does it leave countries with no international clout? Christian Aid believes the deal will seriously damage global efforts to curb tax dodging – a menace which it estimates costs poor countries $160 billion a year, far more than they receive in aid. ‘We fear that the agreement will be soft on the Britons who have illegally hidden billions in the Alpine tax haven but hard on developing countries, which also suffer from Swiss banking secrecy,’ said Christian Aid Director Loretta Minghella.

If it is true that transparency in corporate financial dealings can really make that much difference why don't Christian Aid and other agencies like Oxfam put everything they've got into pressing for a change in the law. Sadly, one reason is that they wouldn't be able to take their supporters with them. Most supporters are more than happy to raise money to feed starving children but they get a bit edgy if their favourite charity starts to become too political. There is also the threat to charitable status if a charity become chiefly a campaigning organisation. It's a difficult dilemma but gradually public opinion is changing and people are starting to realise that if we are to win the war on poverty we aren't going to do it with a collecting tin alone.

Just Film, a British corporate video production company which specialises in programmes on social justice and provides a production service for charities and non-profit organisations.

About ChrisP

Partner in Just Film, a video production company which tries to focus on social justice. A Quaker.
  • Monika

    Poverty really comes in a country without any support. There are times that we may somehow don't have enough food to eat but we are fortunate compared to other people. We should ones country. I mean tax is really important because it somehow help others in a little way.

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