Lucy Hurn, Biofuels Campaigner

Europe’s biofuel targets are wreaking havoc on the poorest communities in the developing world.  Farmers in poor countries are getting pushed off their land to make way for biofuels and as food gets used as fuel to power our cars, food prices go up, increasing global hunger.

This is a clearly a development issue, but so far Europe has tended to see the biofuels debate as purely about climate change. We’ve worked hard throughout this year to get Europe to face up to the destructive impacts of its policy on people lives and specifically called on Development Minsters, who met on Monday, to take action to address the issue.

We’ve been lobbying hard behind the scenes and ActionAid supporters have sent over 5,000 messages to Andrew Mitchel, UK Development Secretary, calling on him to act.

So we were really happy to hear that the issue was addressed when the ministers met in Brussels on Monday with the Belgian development minister calling for concerns about the social impacts of biofuels to be taken into account when the European Commission reports at the end of the year.

The fact that the impact of biofuels on development is being taken seriously in Europe is a real step forwards, moving the debate out of environmental terms and into looking at the impact on real people’s lives.  This gives us a solid basis to keep pushing for an end to Europe’s damaging biofuels policies.

However, we were disappointed that our own minister, Andrew Mitchell, remained silent on the issue.

We are seeking feedback on why this issue was not raised by the UK and are asking him how he intends to take forward work to address the impact of Europe’s policies on development. We will keep you posted.

Sarah Palmer, Tax Justice Campaigner

Back in November 2010, ActionAid exposed how beer giant SABMiller was dodging its taxes all over Africa.  Our research report Calling time revealed for the first time, just how a company can shift millions in profit out of developing countries and into tax havens.

Calling time has now become a reference work in the growing debate on tax dodging by multinationals companies in developing countries.  It’s been so popular, that we’ve had to print some more!  So we’ve taken the opportunity to write a new forward to the report, with an update on the fantastic progress made so far.

In the new edition:

>> How African tax authorities have used the research to tackle tax dodging.
>> How the research has been used at the UN and OECD
>> And SABMiller’s response to the campaign.

Happy reading!

Lucy Hurn, Biofuels Campaigner

We’ve received some great news from Kisarawe,Tanzania where a community we’ve been working with who had their land grabbed for a biofuels plantation have just won back some access rights. Back in 2006 UK company Sun Biofuels took land the size of 11,000 football pitches to grow jatropha - a crop grown for biofuels. The community received none of the promised investment in terms of clinics and schools, few were compensated for land they lost, and they lost access to the graves where their ancestors are buried.

The situation seemed to get worse in August 2011 when Sun Biofuels went into administration and was taken over by a new owner, Lion’s Head Global Partners. Most of those who had managed to secure jobs on the plantation were fired and promises of investment in the community and compensation for land were thrown into even more doubt.

But finally after sustained pressure by the communities and ActionAid supporters the new owners, Lion’s Head, have granted villagers access to their wells and graves. This was a key demand of the villagers – you can see how much the issue means to them by watching this video of Seleman Pazi from the community - and represents an important victory.

Sun Biofuels' letter (in Swahili) to Mhaga village granting access to ancestral land;

But the fight for justice is far from over. The plantation is still shut meaning the only jobs are for the handful of security guards. This seems to be because Lion’s Head Global Partners are having problems securing any new funding. So not only have villagers lost their land, but also their hopes of future income from jobs on the plantation. And with the plantation closed, the promised investments in new clinics and schools looks evermore unlikely.

ActionAid is continuing to work with the community and their campaign for compensation from the new owners and we’ll keep you updated with any news.

In the meantime, you can help end the UK government’s support for biofuels and their devastating impact on communities such as those on Kisarawe by signing the petition here.

Clare Coffey, Policy Advisor

A significant step is being taken today in the fight against land grabs, as the UN Food and Agriculture Organisation adopts a new set of guidelines on land tenure

The guidelines come in response to the massive increase in land grabbing that is blighting developing countries, with Africa hit the hardest.

Foreign land investment is among the five global trends singled out in the latest Africa Progress Report, produced by a panel of eminent people under the chair of Kofi Anan. While the panel welcomes progress on many fronts, on land grabs, it doesn't mince its words:

‘There is no question that Africa needs investment – private and public – in agriculture. What Africa does not need, and cannot afford, is policies that transfer land to investors motivated principally by a concern to feed populations in other countries, supply biofuel markets across the globe, or to secure speculative profit.’

Confirming ActionAid's own experiences on the ground, Kofi Anan’s Panel highlights a number of typical characteristic of land acquisition contracts in Africa:

• Leases are typically provided at very low levels of rent with extensive tax exemptions.

• Investors are seldom required to provide employment opportunities for local communities or to contract with smallholder farmers.

• The contracts are usually drawn up and negotiated behind closed doors without consultations with affected communities, social and environmental assessments, or subsequent requirements for audits.

• There are no food-security safeguards requiring leaseholders to sell food products in local markets during periods of high food prices.

These issues hit women the hardest. The new UN guidelines should help to address them. And as such ActionAid welcomes their adoption, and is calling upon governments to implement the guidelines as soon as possible.

But the guidelines are not binding on countries. And critically, they try to reduce the impacts of foreign land investment, rather than tackling the underlying drivers, including the presence of biofuel mandates.

At ActionAid, we are firmly of the view that unless biofuel mandates are removed, the guidelines can never be expected to make a significant difference. If you agree, sign our petition

Chris Jordan, Tax Justice Campaigner

As GSK is exposed, the government must clamp down on tax dodging 

The BBC's Panorama tonight will add to a long list of allegations of corporate tax dodging. Companies like GlaxoSmithKline, which Panorama claims has used complex offshore structures to avoid millions in UK tax, now join Barclays, Vodafone, Amazon, Apple, Boots, SABMiller and Topshop (amongst others), accused of aggressive tax avoidance.  In a time of austerity, public anger continues to grow against those companies believed to be operating under different rules to the rest of us.

In an interview last year, GSK’s own chief executive Andrew Witty lamented that:
"one of the reasons we've seen an erosion of trust, broadly, in big companies is they've allowed themselves to be seen as being detached from society and they will float in and out of societies according to what the tax regime is. I think that's completely wrong."

Recent polling by ActionAid supports this view (pdf): 79 per cent of UK citizens want to see tougher action from government against tax avoidance. This is an issue that unites voters from all parties; 74 per centof Conservative voters, 83 per cent of Labour voters and 87 per cent of Liberal Democrat voters want to see tax loopholes for big multinationals closed.

Rhetorically at least, the government has responded. George Osborne branded aggressive tax avoidance "morally repugnant" in this year’s Budget speech.  But at the very same time, tucked away in the technical detail of the Budget, are changes that would actually water down the UK’s anti-avoidance rules for multinationals, making it easier for them to avoid taxes.

These "Controlled Foreign Company Rules" have protected the UK tax base for the last 25 years, making it less lucrative for companies to siphon profits into tax havens, as HMRC have simply topped up the company’s overall tax rate to match the standard UK rate.

While some have inevitably found loopholes in these rules, they’ve been an important tool to discourage profit shifting into tax havens. Not only have they helped protect the UK tax base – they’ve also protected developing countries from tax avoidance by UK companies.

The Government's new proposals in the Finance Bill, currently being scrutinised in parliament, will radically alter this. The Treasury's own figures show they’ll lose revenues of almost £1bn as a result.

Developing countries, meanwhile, could lose as much as £4bn a year – almost half the UK aid budget. The OECD estimates that developing countries currently lose three times more to tax havens than they receive in aid.  This means less money that can be invested in schools, hospitals and roads, keeping countries locked in the cycle of poverty. With the government staunchly (and rightly) defending its decision to spend 0.7 per cent of GNI on aid, it seems nonsensical to be making it harder for developing countries to reduce their dependency on aid by raising their own revenues.

One chink of light is an amendment to the Finance Bill tabled by the Liberal Democrats and supported by Labour, that the changes are not made without a proper impact assessment (recommended by the IMF and World Bank), and measures to mitigate the damage. Hopefully the Conservatives on the Bill Committee will join this emerging consensus. 

Another important remedy would be to open up tax haven operations to scrutiny.  Low headline tax rates – like those in Luxembourg that Panorama claims UK companies have exploited - are just one of the attractions of tax havens for tax dodging (over half of FTSE100 companies have a total of 336 subsidiaries registered in Luxembourg). The other is secrecy. As with impenetrable Swiss bank accounts, this veil of secrecy prevents effective scrutiny of deals done in tax havens. Indeed, ActionAid research has shown that 98 of the FTSE 100 use tax havens, where they locate almost 40 per cent of all their overseas subsidiaries. 82 also have operations in the developing world.

If the government is serious about tacking tax avoidance, and serious about sustainably ending poverty, it needs to be putting its weight behind international efforts to break tax haven secrecy, making multinationals publish accounts of their tax haven subsidiaries.

Right now, though, it should urgently rethink its plans to water down the UK’s anti-tax haven rules. It should be making it harder – not easier – for British multinationals to siphon their profits into tax havens, and make sure they pay their tax bills right around the world.

Seb Dance, Government Relations Adviser

If you've been following this blog, you'll know the government are planning to introduce a new tax loophole which could cost developing countries £4bn. You'll also know that we (all 33,000 of us) have said we're not happy with this and together we pushed MPs to table an amendment to the government's plans.

But what next? Well, as they say "here comes the science bit".

The new tax loophole was announced during the Budget in March meaning it's actually part of the Finance Bill. Like all Bills in parliament, the Finance Bill goes through a number of stages. Right now, it's in the Committee Stage.

MPs are selected to be part of a committee set-up just for this Bill and their role is to properly scrutinise the legislation without tying up the entire House of Commons. They are appointed by their parties to go through the Bill line by line and introduce amendments which are either supported or rejected.

You can think of the Committee as a microcosm of the House of Commons itself, with membership broadly representative of the number of MPs held by each party. For the Finance Bill committee the Conservatives have 17 members, Labour 15, the Liberal Democrats three and the DUP one (the smaller parties “rotate” membership of Bill committees - this time it just so happens to be the DUP's turn)

The actual tax loophole we’re concerned with is dealt with under Clause 180 of the Finance Bill. It’s a catchy number, for a rather uncatchy set of rules called the “Controlled Foreign Companies Rules”. It is this clause that the Liberal Democrats have tabled an amendment to and this would give us the improvements to the Bill which we're looking for.

We've also got support from Labour members of the committee so if you do the maths: 15 Labour + 3 Lib Dem = 18. This means that already half the members of the Committee support our proposals. We now need to convince the remaining members that our proposals represent a massive improvement to the Bill by delivering safeguards for developing countries.

It’s no small thing for the Treasury to admit that there is room for improvement on the Finance Bill. But we have an emerging consensus behind us. Not only does the Opposition agree that it is wrong to make it easier for companies to avoid paying tax in developing countries, but one of the coalition parties also agrees with us.

With the backing of Labour, the Liberal Democrats, the Green Party, the SDLP, the IMF, the UN, the World Bank AND the OECD now really is the time for the Treasury to look again at the Bill as it goes through the Committee.

You can help the process along by contacting your own MP and asking them to discuss the £4bn impact a new tax loophole will have on developing countries with their party colleagues.