When I mention in the course of a conversation that I work for an international development charity, I often get an enthusiastic response, saying how rewarding it must be to help dig wells, paint schools and hand out mosquito nets.
The truth is that I do find it rewarding – but the way my
work contributes is probably somewhat different than the popular perception.
Most of my work is office-based, researching the causes of poverty and
inequality, and working with others to identify solutions and present those in
a way that can lead to change.
Aid can change lives – there
is no doubt of that. Debt relief where it has happened has led to increased
social spending. But the most sustainable and effective form of long term
finance for tackling poverty abroad (or for that matter in the UK) is
progressively collected, accountably distributed, tax.
The trouble is that—at home and abroad—billions of pounds that could be spent
providing infrastructure to provide a better life for all is instead lining the
pockets of the rich. Nor is this going unnoticed. In a recent poll, a huge
majority—85% of people—say that tax avoidance by large companies is morally
wrong even if it’s legal - figures that hold across the political spectrum.
Conversely only 1 in 5 people believe political parties have gone far enough in
their promises to tackle
tax avoidance.
The shift in public mood coupled with campaigning so far has prompted some
significant but nevertheless incremental progress; last year for example, the
OECD proposed that
companies should collect data on their taxes and profits in each country
they operate.
Unfortunately they did not go so far as to oblige them to make this information
public, therefore maintaining the shroud of secrecy.
The Government has also introduced legislation which would make it publically
known which individuals own which companies, helping to identify the kind of ‘shell
companies’ that can be used for corruption and tax dodging. Unfortunately
this has not yet extended to the UK’s Overseas Territories.
Then most recently the UK Government announced a Diverted Profits Tax (AKA
“Google Tax”) in December 2014, but once again, it is still weakened by what
we’re calling the ‘Luxembourg Loophole’ for loan arrangements, and it seems
unlikely that it would stop the kinds of tax arrangements exposed by last
year’s “Lux Leaks”.
So there is a long way to go, and to ratchet up the
pressure this week 16 domestic and internationally focused organisations have joined
forces to launch a campaign for a Tax
Dodging Bill, packaging together a series of measures to help tackle tax
dodging in its various manifestations and to challenge the provision of
unjustifiable tax breaks for large companies.
As we have been doing for many years, we’re still calling for public disclosure
of country by country reporting, as well as a review of corporate tax breaks, a
tightening up of anti-tax haven rules and a heightening of penalties for those
who those who don’t play by the rules. We estimate that billions could be
returned to developing countries as a result, and £3.6 billion for the UK - the
equivalent of £600 for every household living below the poverty line.
And the great thing is that you don’t have to fly to the other side of the
world to help dig those wells, paint those schools or hand out those mosquito
nets. In fact you don’t even need to have any skills in those things, because
outside of humanitarian emergencies, providing health and education
infrastructure is best led by the governments of the countries concerned rather
than international visitors.
What we can do is help those countries recoup the tax they are due, by acting on
the knowledge that the best type of charity is justice.
Comments
We encourage anyone to comment, please consult the oD commenting guidelines if you have any questions.