Campaign blog

ActionAid UK's new report out today outlines why the UK's tax rules don't work for poor countries. Anders Dahlbeck tells us why we need to keep up the campaign pressure.

Tax justice protesters in Lusaka
Tax justice protesters in Lusaka
Photo: Owen Miyanza/Demotix/ActionAid

In a new report today, ActionAid UK outlines why the BEPS (base erosion profit shifting) project, which is supposed to fix tax dodging, doesn’t work for poor countries.

What's missing from the BEPS?

  • Poor countries are not part of the negotiations of new international tax rules. They are being consulted, but when push comes to shove, it’s rich countries at the negotiating table making the decisions.
  • The BEPS project doesn’t deal with many of the issues that are important to developing countries. For example, it doesn’t deal with the issue of where profits made in developing countries are taxed.
  • The solutions proposed are often expensive and unnecessarily difficult to implement. This makes it hard for resource poor developing countries to benefit from them.

This is all very disappointing as rich governments last year promised that international tax reforms would benefit poor countries as well.

We need to keep up the campaign pressure

Campaigners should not be discouraged though. The fact that the BEPS project is happening at all is in large parts down to campaigners showing their outrage at tax dodging in the past few years. Politicians responded to our demands to put this on the political agenda. Now we must hold them accountable for delivering.

This wave of tax reforms will also bring some positive things with it, mainly for prosperous and resource rich countries. These benefits include increased transparency around where companies book their profits and pay tax. This will make it easier for tax authorities to ensure that companies pay the tax that they are supposed to.

Developing countries need to be treated equally

Continued pressure will also help push international forums such as the G8 and G20 to commit to further reforms that will actually benefit poor countries who desperately need big business to pay their fair share of tax, so that those countries get the revenues needed to lift themselves out of poverty.

It is important that from here on in developing countries are treated as equal partners in international tax negotiations. The best way to ensure this, is to move tax reform negotiations away from restricted forums such as the Organisation for Economic Cooperation and Development (where they are currently taking place) into truly global forums, such as the UN.

Campaigning against corporate tax dodgers works

Murray Worthy's picture Murray Worthy Tax Justice Campaign Manager

A study by a group of American academics has found that public naming and shaming of tax dodging firms is an effective campaigning strategy - causing firms to change their attitudes towards tax avoidance.

Campaigners on the South Bank call for an end to dodgy tax havens
Campaigners on the South Bank call for an end to dodgy tax havens
Photo: ActionAid

The academics aimed to find out whether naming and shaming companies through ActionAid’s FTSE 100 Tax Haven Tracker had an impact on their behaviour.  Our research, published in 2011, found that of the 100 biggest companies listed on the London Stock Exchange, a staggering 98 used tax havens. ActionAid’s research showed for the first time just how embedded the use of tax havens is in the structures of nearly all Britain’s biggest companies.

The academics looked at 49 FTSE 100 companies identified by ActionAid’s FTSE 100 Tax Haven Tracker as having failed to comply with UK laws requiring them to disclose their subsidiaries in tax havens.

Campaigning works

Their research showed that the amount of tax paid globally by a sample of these companies rose by 3.7% over the period of the study - compared to the other companies that fully complied with the law. The authors of the study attributed this increase in tax paid to public pressure as a result of being named and shamed.

The study estimates that each was paying on average £23 million more in tax to governments around the world than before, equivalent to hundreds of millions of pounds of extra tax now being paid.

This study supports our belief that public campaigning has a real impact on curbing tax dodging by some of the world’s largest companies. While it’s encouraging news that progress is being made there remains a long way to go before all companies pay their fair share of tax wherever they operate around the world.

Get your community behind the call for a fairer global tax system:

This week we’re busy celebrating the news from Kirklees Council in West Yorkshire, the very first council to pass our Towns Against Tax Dodging motion, with a clear majority. Thank you Kirklees!

ActionAid 'Towns Against Tax Dodging' training, London, UK

With more debates in the pipeline in West Lothian, Islington, Renfrewshire and Tiverton, let’s hope for more soon. A special mention must go to Nottingham City councillors who passed their own, almost identical, motion back in February, so passionate are they to end corporate tax dodging.

Huge thanks to all of you who’ve been busy talking to your councillors, getting local parties talking about tax dodging in the crucial lead up to autumn party conferences and next year’s general election.

The obvious passion from Peter O’Neill, the Kirklees councillor who proposed the motion, and the animated debate from across the council exemplifies the level of anger felt by the public around the country about the blatant unfairness of corporate tax dodging while ordinary people face rising costs of living and falling income.

But it’s even tougher in the global south, where it can be a struggle to provide even the most basic services. It’s a scandal that a market stall holder like Caroline Muchanga from Mazabuka in Zambia pays more tax than the UK-owned multinational next door to her stall, whose sugar she sells.

It’s not just a global issue, as Cllr O’Neill points out, this is a cross-party issue in the UK. Our research shows that voters from across the spectrum care equally about ending tax dodging.

It’s an issue all the political parties talk big about, from Cameron’s warning to multinationals to ‘wake up and smell the coffee’, promising to lead efforts against global tax avoidance, to Ed Miliband’s vow to ‘rip up the rule book’ and go it alone if the UK can’t get an international consensus.

Yet for all the warm words, no political party is doing enough - particularly for the countries that need the billions in lost revenues the most. This has got to change.

Help make noise in towns up and down the country to show the demand for government action to curb tax dodging in the UK and the world’s poorer countries.

ActionAid’s Tax Justice Campaign has taken off in over 20 countries around the world. Take a look at some of the highlights and progress made in recent months.

Hundreds march as ActionAid Uganda launches its Tax Justice Campaign, September 2013
Hundreds march as ActionAid Uganda launches its Tax Justice Campaign, September 2013
Photo: ActionAid

It’s easy to feel overwhelmed at times by the scale of the challenge of fighting for something like a fairer tax system. Let’s remind ourselves then of two things. Firstly, that we’re not alone in this.

From Bangladesh to Nigeria, ActionAid campaigners from 20 federation partners across the globe have been joining the fight for tax justice, as part of ActionAid’s global Tax Power Campaign.

Secondly, that progress is being made all the time towards a time when multinationals will pay their fair share like everyone else. As my good friend, Kenyan campaigner Joy Maghoi once told me, every journey of a thousand miles starts with one step.

May

After we exposed Zambia Sugar (owned by Associated British Foods) for paying ‘virtually no’ corporation tax in Zambia despite making US$123m in profits, the Netherlands government commits to review tax treaties with 23 developing countries and issues a clear warning to ‘shell’ companies that they must prove their Dutch operations are legitimate, or leave.

September

Hundreds of teachers, nurses, police, farmers and MPs march together with ActionAid staff from across the country to launch the campaign in Kampala, Uganda. The protest is followed by a public debate. The government agrees to put all tax treaty negotiations on hold until a framework for fairer treaties is agreed.

October

The Rwandan government announces a reduction in tax breaks for multinationals after a report by ActionAid on the impact of tax incentives in East Africa estimates that Rwanda loses out on at least 25 per cent of potential revenues in incentives and exemptions to businesses

Financial consultancy firm KPMG issue a report, Tax and Morality, acknowledging the reputational risk for companies involved in tax avoidance and the public momentum behind changing the rules. Campaigners are credited with helping

November

A leaked Deloitte paper, Investing in Africa through Mauritius, helps lift the lid on the tax avoidance techniques being used to deprive poor countries of hundreds of millions of dollars in tax through the tax haven island.

ActionAid Zambia staff meet with Vice President Guy Scott, who agrees that Zambia Sugar should not be paying as little as 10% in business taxes while some farmers pay 35%. He proposes a working group to look at tax avoidance, specifically at the examples brought to his attention - a huge step in the start of serious engagement with the government.

December

ActionAid Nigeria and ActionAid Ghana submit evidence to the African Union High Level Panel on Illicit Financial Flows in Accra as part of investigations into the funds Africa loses through illicit channels. Evidence includes ActionAid’s Barclays and Deloitte reports, ensuring a strong civil society input.

ActionAid Malawi launch their campaign with a protest march of over 300 people and a report on how Malawi’s tax system affects people living in poverty. The Director of Revenue in the Ministry of Finance announces a number of commitments, including a review of tax laws related to harmful tax breaks given to multinational companies.

March

Campaigners in Nigeria hold a silent protest at a meeting of the African Union Finance Ministers, getting the attention of ministers with placards urging action on tax dodging. The Nigerian Finance Minister draws on ActionAid research and analysis to encourage his colleagues to take action.

April

ActionAid Demark begins its month-long Tour the Future cycle tour, cycling the length and breadth of Denmark accompanied by ActionAid Zambia Activista campaigners. Working with local volunteers in each town campaigners build mock tax havens and hold events to raise awareness of multinational tax avoidance and its consequences for developing countries.

After campaigning and advocacy by ActionAid Tanzania, the Tanzanian government cancels the licences of 174 mining companies, citing failure to pay their taxes on time.

May

Hundreds of Zambian campaigners and their partners march against UK listed company KCM, subsidiary of Vedanta after questions are raised about how much tax they pay. The Zambian Revenue Authority responds with a forensic audit of the company’s accounts.

June

The Irish Government begins an analysis of how their tax system affects developing countries, as exposed by ActionAid’s Sweet Nothings report, following the Netherlands’ example.

You can help ensure whoever wins the next election commits to action on corporate tax dodging.

Stand in solidarity with us - Towns Against Tax Dodging

Tilvas Ngosa's picture Tilvas Ngosa ActionAid Activista campaigner (Zambia)

My name is Tilvas Ngosa. I am ActionAid Activista campaigner based in Lusaka, Zambia. I am proud of being Zambian, especially that it is one of the most peaceful nations on the globe. However I am not proud that despite being the second largest copper producer in the world, two out of three people still live below the poverty line. On the 24th October my country celebrates 50 years of independence, yet there is still a shortage of medicine and poor health service delivery - two hospitals in the capital Lusaka cater for over 13 million people. Truly, poverty is the worst form of human rights violation.

Tilvas marches to the HQ of Vedanta’s Zambian subsidiary KCM as part of a demonstration by ActionAid Zambia and civil society partners.
Tilvas marches to the HQ of Vedanta’s Zambian subsidiary KCM as part of a demonstration by ActionAid Zambia and civil society partners.
Photo: Godfrey Ochieng/ActionAid

Stand in solidarity with Zambia

It doesn’t have to be this way. Developing countries loose three times more tax than they receive in aid each year. My country would be less dependent on donor aid to sustain national development if it received its fair share of taxation from extractive mining companies and from other multinational companies. Increased tax revenues would help fund the much needed health service, education, water and sanitation, and reduce poverty.

This is why I’m asking you to stand in solidarity with campaigners in Zambia and join the Towns Against Tax Dodging campaign. By signing up your local council and making the campaign more visible in your area, you will be building grassroots pressure on your leaders in the lead up to UK elections next year. Your call for tax justice will have a huge impact on Zambia and countries across the globe.

A growing global movement

There is a growing campaign movement in Zambia against tax dodging, led by ActionAid Zambia, supported by the church and civil society. Our most recent protest was against Konkola Copper Mines (KCM), owned by UK mining giant Vedanta. We marched with over 200 concerned citizens to KCM headquarters to present a petition for the mining giant to come clean about its profits and pay its fair share of tax so that we Zambians also benefit from our mineral. Because of our action, the President warned KCM over its dishonesty and the government has begun a forensic audit of KCM’s finances.

Ask your council to support Towns Against Tax Dodging

Dedicated supporters, we know that if we take individual actions, we can make change happen. I am fighting against tax dodging in my community - will you join me and bring your community on board Towns Against Tax Dodging?

Our Mayfair Tax Tour in pictures and film

Natasha Adams's picture Natasha Adams Activism Officer

Several months in, our tax tour is gathering steam. This is a walking tour with a difference - we explore the mechanics of global tax dodging by touring Mayfair businesses. If you're confused about how the tax dodgers dodge AND get away with it, Show me the Money is the tour for you.

Most walking tours focus on buildings and history. Show me the Money uses place and story-telling to bring tax dodging to life. We look at the companies ActionAid has exposed, the loopholes they use, and how tax dodging affects people in some of the poorest countries.

Mayfair makes a striking backdrop. As we discuss how tax dodging is driving global inequality, and with it relative and extreme poverty, we're passed by people clad in designer suits driving Bentleys. The routes takes us past landmarks like the Ritz, De Beers diamond emporium and several yacht shops.

The tour has gone down really well so far, with excellent feedback from attendees. Russell Whiting wrote a lovely blog to give his thoughts on the tour. If you use twitter, you can take a look at #taxtour to see what people are saying. The film trailer and gallery above should also give a good idea of what the tour is like.

We've been touring Mayfair since May this year, and we're going to continue to run the monthly tours as long as people want to come. The August tour is full, but tickets are available on Tuesday 9th October and 14th October 6 - 8pm.