Poor nations lose Sh94bn daily to tax cheats, says Oxfam
US President Barack Obama with First Lady Michelle after he addressed the G8 Summit at Waterfront Hall in Belfast, Northern Ireland, June 17, 2013. Photo/AFP
What you need to know:
The money is lost through secretive land investment deals, mispricing of commodities and tax evasion.
The international aid agency estimates that 40 per cent of the $18.5 trillion so far hidden by wealthy individuals in tax havens is currently under the G8’s jurisdiction.
The Oxfam now wants G8 to make sure any new tax deal includes tax havens and developing countries, so that all countries can tax companies and individuals fairly to rescue struggling public budgets.
Developing nations lose Sh93.5 billion per day in illicit financial flows that end up in tax havens around the world, international aid agency Oxfam says.
The money is lost through secretive land investment deals, mispricing of commodities and tax evasion.
In a statement targeted at the on-going G8 Summit at Long Erne, Northern Ireland, Oxfam said stopping land grabs and closing tax loopholes would help combat global hunger.
“G8 leaders have their work cut out to ensure this Summit tackles the scandals of land grabs and tax havens that are keeping poor people poor and hungry,” said Oxfam Ireland’s executive director, Jim Clarken.
The G8 Summit brings together leaders of Canada, France, Germany, Italy, Japan, Russia, USA and the UK.
Left to continue unabated, the Sh187 billion ($2.2 billion) that is set to flow illicitly into tax havens during the two days of the G8 Summit alone could change the fortune of an entire country.
"The illegal outflow could finance the entire education budgets of Kenya and Tanzania or help 2.5 million farmers in Indonesia provide food for themselves and their families," Oxfam said.
As things stand, the vulnerable communities are at risk of losing their homes and the farmlands they need to grow food, without compensation and often violently.
“The G8 must change the rules so that no corporation or rich individual can avoid paying their fair share of taxes, and so that no company can take land from poor families without facing repercussions,” said Mr Clarken said in a statement.
The international aid agency estimates that 40 per cent of the $18.5 trillion so far hidden by wealthy individuals in tax havens is currently under the G8’s jurisdiction.
This means the G8 is also responsible for 40 per cent ($66 billion) of the revenue ordinary people around the world are losing as a result, adds the Oxfam statement.
The statement comes hot on the heels of a report released last month by the Kofi Anan-chaired African Progress Panel (APP), which showed that Africa alone loses billions of dollars every year due to end tax evasion, corruption, and weak governance.
The APP report titled, ‘Equity in Extractives: Stewarding Africa’s Natural Resources For All’ found that Democratic Republic of the Congo alone lost more than $1.3 billion (Sh108 billion) in five secretive deals between 2010 and 2012.
According to Oxfam, G8 firms and investors have bought land in developing countries more than the size of the whole of Ireland since the year 2000.
The Oxfam now wants G8 to make sure any new tax deal includes tax havens and developing countries, so that all countries can tax companies and individuals fairly to rescue struggling public budgets.
It also wants the G8 to support a public registry of companies and trusts that will stop tax evaders, corrupt officials and the beneficiaries of illicit funds from hiding their wealth in tax havens.
"So far, the G8 companies and investors have bought large chunks of land in developing which could grow enough food for 96 million people", it says.
“In a world of austerity, and where inequality is getting worse and 1.2 billion people remain living in extreme poverty, the G8 must take action to readdress the balance and ensure that everyone has enough to eat,” Mr Clarken said.
