A few days away last week coincided with IT trouble back home. I pay tribute to my wonderful colleagues who had to deal with major hassle while I was enjoying a relaxing break. Fantastic live music has been replaced this week by some great recorded stuff: Silbermond from Germany in particular. More anon (when I get time).
However, a busy return to work has taken place in the context of the finale of the US presidential election and debates in the UK about banks, taxation and services. Fundamental to both is the choices we face in every western country as to how much tax we are willing to pay in order to get the services we demand. It is almost boring to note now the silliness of laudatory observations on (for example) Scandinavian welfare and infrastructure provisions without reference to the high levels of taxation that enable the provision in the first place. We get what we pay for.
(Do Mitt Romney's fans not question his promises that the 'American Dream' that produces winners also presupposes that there will be losers?)
A meeting with Christian Aid recently reinforced some of the thinking going into plans for world religious leaders to hold G8 political leaders to account for their commitments to the Millennium Development Goals. These goals are supposed to have been realised by 2015. The G8 leaders meet in the UK in (probably) May or June 2013. The following observations offer a basis for wider thinking on the issues and challenges:
- Tax is key: it provides long term finance for health, education and welfare and makes governments more accountable to their people.
- Tax is lost: Christian Aid estimates that tax dodging by some unscrupulous multinational companies costs developing countries at least US$160 billion a year. That’s more than 1.5x the entire global aid budget. (A Kenyan school costs about $10,000 to build. $160 billion could be the equivalent of 16 million schools.)
- The problem: These companies are able to do this by artificially shifting their profits into tax havens. Tax secrecy makes trade mispricing possible allowing companies to shift profits out of a country and pay less tax. (Examples of trade mispricing from 2005: 36,000 kilos of Nigerian coffee were exported to the US for 69p per kilo at a time when the world coffee price was $2.35. A consignment of hairdryers was exported to Nigeria at a cost of US$3,800 per hairdryer when the market price of that model was US$25.)
- A solution: Call for greater transparency and accountability by requiring tax havens to share information with developing countries and companies to report on their profits in each and every country they work in.
Christian Aid suggests that those bothered by this issue (and see recent comment on Starbucks, Facebook, Apple, etc.) might write to the Prime Minister and call on him to use his Presidency of the G8 in 2013 to put the issue of tax transparency at the centre of the global agenda. This can quickly be done here.
This is the beginning of some thinking as we look towards 2013.