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thomas davison

Poor countries 'should rely on tax, not UK aid', say ministers
�Department for International Development is enjoying increases to take its budget up to 0.7% of GDP
By Daniel Martin, Whitehall Correspondent
PUBLISHED: 01:20, 23 August 2012 | UPDATED: 07:44, 23 August 2012

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Ministers should do more to ensure that recipients of British aid money do more to collect their own taxes properly, MPs said last night.
The Commons International Development Committee said that if poorer nations collected their own taxes effectively, they would not have to rely on British taxpayers quite so much.
They said a reliable flow of tax revenues offered countries a far better route out of poverty than reliance on foreign aid donations.

Afghanistan war widows line up to receive monthly ration in Kabul. The Commons International Development Committee said that if poorer nations collected their own taxes effectively, they would not have to rely on foreign aid
The MPs urged the Department for International Development to support the revenue authorities in developing nations to improve the collection rates of income tax, VAT and local property taxes.
More...�Aid agency reveals existence of secret Syrian hospital to highlight war-torn country's desperate' health situation

While most government departments have had to endure severe cuts, but DfID is enjoying increases to take its budget up to 0.7 per cent of GDP.
Committee chairman Sir Malcolm Bruce said: 'The aim of development work is to enable developing countries to escape from over-reliance on aid.
'Supporting revenue authorities is one of the best ways of doing this: it represents excellent value for money, both for the countries concerned and for UK taxpayers.'

The committee said it was essential that the governing 'elites' within developing countries paid - and, critically, were seen to pay - the correct amounts in personal taxation.
'Tax is an issue of fundamental importance for development,' its report said.

'If developing countries are to escape from aid dependency, and from poverty more broadly, it is imperative that their revenue authorities are able to collect taxes effectively.'

But the MPs said efforts to improve tax collection were hampered by new Treasury rules for multinational companies which give them an incentive to shift profits into tax havens.
Recent changes to so-called 'controlled foreign companies' rules mean that less tax money will flow into the coffers of developing countries.
One aid agency, ActionAid, has estimated that it could cost developing countries up to �4billion in lost tax revenues, and the committee said the Government should consider reversing the changes 'as a matter of urgency'.

Recent changes to so-called 'controlled foreign companies' rules mean that less tax money will flow into the coffers of developing countries
Sir Malcolm said: 'The Government is committed to supporting economic growth in developing countries to reduce their dependency on aid.

While this is clearly the right thing to do, it would be deeply unfortunate if the Government's efforts were undermined by its own tax rules.'

The report said that ministers should introduce rules requiring companies to publish financial information on a country-by-country basis to discourage cross-border tax evasion.
So far the Government has been reluctant to act unless other EU countries are prepared to follow suit, but the MPs said Britain should now be prepared to go it alone.
Lucia Fry, ActionAid's head of policy, said: 'Tax avoidance is now a major global concern, and the UK needs to take into account the impact of its own tax regime on the world's poorest countries.
'This lost revenue could enable poor countries to put more teachers in schools and nurses in hospitals, as well as ultimately helping end aid dependency.'

A spokesman for the Treasury said the controlled foreign company rules were there to protect UK tax revenues and were not designed to protect those of other countries.

The changes were designed to encourage investment and drive growth in the UK.
'It is not sustainable for developing countries to protect their revenue using our tax rules, a much better way is to build their capacity and capability to collect the tax that they are due,' he said.

I wonder how long it took them to that out. It just goes to show you there may be light at the end of the tunnel yet, but I wouldn't bet on it. Just one more thought. If these so called poorer countries did start collecting taxes, their first priorities would probably be spent on military items, not the poor.

How can a struggling county like Britain continue to fund other countries?.
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