Campaign blog

Six months to the election – let’s make it count

Eva Watkinson's picture Eva Watkinson Campaigns Engagement Manager

Today marks six months until the UK general election on May 7th. The next few months are crucial. Together we have to get tax dodging - which costs developing countries and the UK billions - to the top of politicians' agendas.

Campaigners hold sign outside parliament, reading 'Stop the budget tax loophole, costing poor countries billions'
Campaigners take action for tax justice outside parliament
Photo: ,Kristian Buus/ActionAid

Over the past few months, campaigners across the UK have been pushing hard to make sure politicians know that constituents in their communities want them to act. Over 10,000 people have taken action across the UK. Seventeen councils have passed a motion against tax dodging; we’ve got coverage for the campaign in local media, and got local shops and businesses on board.

Have a look at our map to see if your council has already passed a motion supporting the campaign.

But we need to ramp up the pressure. Tax dodging costs the UK an estimated 12 billion every year and developing countries lose three times more to tax havens than they receive in aid.

ActionAid's global tax dodging campaign

It's not just in the UK that campaigners are taking action. Activists have been campaigning in over 20 countries as part of our global campaign. Charity Chisnaga, a campaigner from Zambia told us why she got involved: 

“Why this campaign is important to countries like Zambia is that revenue lost through tax havens denies ordinary citizens access to good healthcare services and education.

"Tax is a global issue and that's the reason more support is needed in solidarity, so that this giant monster of tax havens can be fought by all to make the world a better place for all.”

Holding politicians to account

We’ve already heard commitments from many politicians about taking action on tax dodging, but we have to make sure they are held to account. And the only way to do that is to make sure they know people in communities across the UK want them to act.

We’ve got a great opportunity over the next few months, let’s make it count.

Take action today by getting your local shops to sign up to the campaign, emailing your local councillors or spreading the word about our Towns Against Tax Dodging campaign.

Poorer countries losing out to Luxembourg’s tax avoidance

Murray Worthy's picture Murray Worthy Tax Justice Campaign Manager

This morning, splashed across the pages of The Guardian, an unprecedented investigation into the tax affairs of over a thousand companies by the International Consortium of Investigative Journalists has exposed the huge scale of tax avoidance through Luxembourg.

Campaigners attract attention on South Bank with a pop-up tax haven, called Isle of Shady
Campaigners make a pop-up tax haven stunt on the South Bank
Photo: ActionAid

Based on nearly 30,000 pages of leaked documents, the investigation reveals how large multinational companies have created special corporate structures, with the approval of the Luxembourg government, that have allowed them to reduce their tax bills elsewhere. All of this is legal, but allows these companies to avoid paying their fair share of tax in the countries they operate in.

Poorer countries losing out

As well as leaking the internal tax affairs of well-known companies like Amazon, Ikea or Pepsi, the investigation reveals how some of the world’s poorer countries are losing out.

In one case, three Brazilian banks set up a complex system of financial transactions that allowed them to avoid nearly $90 million in taxes, according to an analysis of the leaked files by a Brazilian newspaper. This lost tax revenue could have a huge impact on public services, in a country where around 7.5 million people live on less than $1.25 a day.

Fundamental tax re-think needed

Responding to the investigation, ActionAid’s tax campaign manager, Murray Worthy said: “This exposure of the industrial scale of global tax avoidance run through Luxembourg clearly highlights the need for global action – but even the latest reforms by the G20 just tinkers around the edges of this broken system.

“This is a global issue. As well as the high street names, these files also expose how big businesses have been dodging millions of pounds of tax not just in wealthy countries, but also in the world’s poorer countries.

A fundamental re-think of the world’s tax system is needed, that puts all the issues on the table and includes all countries, including developing countries, as equal partners, to tackle these kinds of abuse.

“The current plan of letting rich countries and tax havens like Luxembourg discuss amongst themselves how to make small changes to the tax system will not stop these scandals.”

Be part of the movement for a fairer tax system, by getting your community to support our Towns Against Tax Dodging campaign.

Anger against tax dodging is alive and well across the UK, and people are keen to turn their anger into understanding and local action. Will you join us?

Campaigners at the Haringey Against Tax Dodging Event
Campaigners at the Haringey Against Tax Dodging Event
Photo: Claire Donner/ActionAid

We've organised events across the UK to campaign against tax dodging and it's going even better than we'd hoped!

Each event we’re organising is a little bit different, but the idea is to discuss the problem of tax dodging and it’s impacts in the UK and the world’s poorest countries, then to explore solutions. We provide free tea and biscuits, and give you the chance to meet like-minded locals and consider what actions you can take as a community.

Campaigners at the Bristol Against Tax Dodging eventCampaigners at the Bristol Against Tax Dodging eventOur first event in Haringey in London earlier this week saw 25 people of all ages come together to learn about tax dodging. But they were most passionate about channelling their anger into solutions – Local Organiser Sophie Wills-Virk is already planning to return to lobby her council to pass a motion in support of Towns Against Tax Dodging with local support. Our Bristol event yesterday drew a similar crowd and sparked discussion about plans to campaign in the city.

Thanks to everyone who has attended an event so far!

Find an event near you

We’ve got 7 more local events planned over the coming weeks. It’s not too late to book a place:

Local organisers are the key to our success

Back in the summer, we recruited local organisers from across the UK. Our organisers are passionate volunteers who are leading the Towns Against Tax Dodging campaign in their communities, helping us by booking, planning and promoting these local events. We couldn’t have done it without them! Thanks Sophie, James, Jeanette, Adrian, Will, Harpreet, Jo, Kamaljit and Damon for all your hard work.

If there’s nothing happening near you but you’d like to help us organise an event please get in touch – we’d love to spread our reach wider, but we need your help!

Corporate goodwill and angry women

Ruth Kelly's picture Ruth Kelly Programme Policy Manager

Last week Oxfam and DFID hosted a NGO-private sector roundtable on women’s empowerment in agricultural supply chains. The discussion brought together cutting-edge thinkers and do-ers in the corporate accountability field. It was impressive to see what can be achieved through the goodwill of progressive companies. But do we need to go beyond this, harnessing the power of angry women, before we see sector-wide change?

Cambodian garment workers take to the catwalk to demand decent work and dignity from big brands
Cambodian garment workers take to the catwalk to demand decent work and dignity from big brands
Photo: Siv Channa, Cambodia Daily

Assessing companies' poverty footprint

At the moment, governments and customers usually rely on certification schemes to tell them whether or not a company is ethical. These schemes are far from perfect. There is no guarantee that auditors do a particularly good job of assessing compliance – and lots of anecdotal evidence to suggest that they don't. Certification schemes miss issues that are really important for women workers: the precarity of women's work, violence against women in the workplace, the impact of unpaid care burdens on women's opportunities, and more.

Oxfam's poverty footprint methodology has been at the cutting-edge of alternatives to certification. It's a rigorous tool for drilling down through a supply chain, looking at the impact of core business practices on poverty. The companies involved give Oxfam access to information that is not publically available. Even more interesting, the results are published in reports that are fairly critical of those companies.

But there are limits to doing a company-by-company analysis of what's wrong and how to fix it. Those implementing the recommendations are not always the ones responsible for the company's core work. The analysis is slow, expensive and rarely drives sector-wide change.

Looking at problems across an entire sector

The problems identified in a poverty footprint analysis are hardly ever unique to that company – they are usually endemic across a given sector. Maybe we don't need to look at these issues one company at a time. By the end of last week's discussion, there was a lot of support for analysing an entire sector or geographical area instead.

In 2007, ActionAid tried to do something a bit like this for the UK supermarket industry. While supermarkets' supply chains encompass more than one sector, there are enough common elements to make an analysis of multiple supply chains interesting. Our research showed that pressure from UK supermarkets for lower prices, faster delivery times and greater flexibility is passed on to workers in the form of low wages, job insecurity and a denial of their basic human rights. Business associations campaigned with us to change the law in response.

It would be great to see a more in-depth and sector-specific version of this type of research, especially if the researchers could access privileged information directly from suppliers.

But I'm not sure that this is what those at last week's roundtable had in mind. In discussing how to empower women in supply chains, there was a lot of attention paid to the need for crucial on-the-ground changes. Women should receive training and not just their male colleagues. Childcare should be made available to mitigate unpaid care burdens. Women should be paid more. Interventions to support women must go beyond the economic sphere and address social inequalities.

The responsibility of UK retailers to have more realistic expectations of suppliers never came up.

Powerful multinationals and collective bargaining

One of the reasons that NGOs spend so much time talking to multinationals is that these companies have a lot of power. Most agricultural value chains are made up of a few powerful players in the middle and many, many small players at the bottom. Suppliers don't have many options when faced with unrealistic requests. And neither do women workers.

The same economic liberalisation that has given a handful of multinationals so much power has undermined the power of trade unions to negotiate for better conditions.

Empowered women should be able to reject the incremental changes a progressive company is offering and argue for something they want more instead. Think Made in Dagenham for the 21st century. As we recently saw in Cambodia, angry women can drive sector-wide change where corporate goodwill has failed.

It feels strange to promote women's economic empowerment without giving women real power to bargain for economic equality for themselves. Participants in last week's discussion were willing to listen to women's concerns, but we need to go much further than this. Let's hope that angry women feature more prominently in Parliament's International Development Committee inquiry into jobs and livelihoods over the next few weeks.

How to catalyse development: vision vs reality

Ruth Kelly's picture Ruth Kelly Programme Policy Manager

The new OECD Development Cooperation report has a vision for the radical transformation of economies across the developing world. But the recommendations, which emphasise ‘leveraging’ private sector investment, are unlikely to get us there.

Myanmar's National Economic and Social Advisory Council economic development forum
Ha Joon Chang and ActionAid's Rick Rowden speak to senior officials in Myanmar about economic development
Photo: National Economic and Social Advisory Council, Myanmar

Supporting nascent domestic industry

The launch of the OECD report in London last Thursday kicked off a debate on how to finance implementation of the goals that will replace the Millenium Development Goals.

In his introductory remarks, Erik Sonheim, chair of the OECD’s development assistance committee, praised South Korea’s leaders for ‘getting the politics right’. Today, their citizens are 390 times richer than they were in 1953.

As Ha Joon Chang describes in his 2002 book Kicking Away the Ladder, the South Korea story was built on state support for nascent domestic industry. The UN Committee on Trade and Development’s 50th anniversary report showcases the efforts of a handful of developing countries to take a similar approach.

By regulating trade, by providing incentives and concessional loans, and by sourcing from domestic suppliers, governments in the South are helping to establish a robust and well-rooted domestic private sector.

The middle-classes in developing countries are growing rapidly, providing these businesses with new markets to serve. The taxes they pay on their profits allow governments to support more domestic businesses, as well as investing in crucial services like education.

But these efforts are the exception, not the rule.

Throwing money at investors already thriving

The South Korean approach to development has been under attack for many years. Liberalisation has left governments without trade policy tools. The idea of a small state is so pervasive that it is almost heretical to argue – as ActionAid often does – that the state should play a more prominent role.

More and more, aid is being used to ‘leverage’ private sector investment. Donors claim that without this support, the businesses involved would struggle to get access to capital, or choose not to invest in a given sector.

But there is almost no evidence to back up donors’ claims.

Most support goes to big businesses that are already thriving. Many investors say that they would have invested anyway, even without donor support.

Big business doesn’t need aid to encourage it to invest in developing countries – it can already see the potential. The recent spate of “Africa Rising” stories is not a PR exercise by development professionals, but a reflection of commercial opportunity.

Helping big business to capture the market

Multinational companies have enormous power in a liberalised world. They are less rooted in an economy than domestic firms – they can and often do move on if workers demand better conditions or a living wage. Their complex business structures allow them to avoid tax, putting domestic firms at an enormous competitive disadvantage.

Donor finance, and the political support that goes with it, increases that power.

There is an irreconcilable contradiction at the heart of the OECD report. A new South Korea story will not be built on anti-competitive market capture by multinational giants.

Undoubtedly there are cases where investment by big business has a positive impact on growth and poverty reduction. But aid and development finance should not be used to support it unless there is clear evidence that this support is needed.

All the political parties spoke about tackling tax dodging at their Party Conferences this month. The question is - will any Party insist that the poorest countries benefit from global tax reforms?

Barry Johnston, ActionAid's Head of Advocacy with Tessa Munt MP at the Liberal Democrat Party Conference
Barry Johnston, ActionAid's Head of Advocacy with Tessa Munt MP at the Liberal Democrat Party Conference
Photo: Caroline Jones, ActionAid

The ActionAid Advocacy team took our Party Conference show on the road one last time last week, heading to the Liberal Democrat Conference in Glasgow. As Party faithfuls gathered to vote on Liberal Democrat policy and regroup ahead of next year’s General Election, the air was one of quiet confidence in another coalition after the Polls in May.

Hot off the heels of George Osborne’s announcement of ‘the Google tax’ – a tax to stop technology companies from dodging corporation taxes - the Lib Dems were, unsurprisingly, keen to take some credit for their efforts as part of the coalition, with Danny Alexander making his own announcements on clamping down on tax avoidance.

A race to the top on tax avoidance?

Tessa Munt MP, Parliamentary Private Secretary to Vince Cable at the Department of Business, Innovation and Skills, took a strong stance at our fringe event on tax dodging, 'Race to the Top on Tax Avoidance in 2015'. In her speech she said that the Conservative Conference had indicated that “tax was for the little people”.

Deborah Hargreaves of the High Pay Centre spoke about corporate capture of the tax system, writing tax legislation, “in its own interests.” The event and our Tax Justice Campaign received a ‘cautious’ stamp of approval from speaker Carl Bayley, Chair of the Institute of Chartered Accountants of England and Wales’ Tax Faculty, who called for a "fair and transparent tax system where everyone pays their fair share".

It isn’t just politicians who need to worry about public anger 

Half the audience had boycotted companies accused of tax avoidance. In fact, we know that 84% of the public are angry at corporate tax avoidance, blaming politicians as well as companies. Politicians know this too. Ed Balls, Ed Miliband, George Osborne, David Cameron, Danny Alexander and Vince Cable all briefly referred to clamping down on tax dodging during their conference speeches.

Nick Clegg was no exception. Wrapping up conference season on Wednesday, tax dodging made a brief appearance, with a pledge to “close loopholes that unfairly benefit those at the top.” What ActionAid supporters want to know is, will the poorest countries that need these funds the most be a part of this process?

Talking to Party members, one thing is clear. Anger at the colossal injustice of multinationals finding ways to contribute less while ordinary people foot the bill isn’t going anywhere. The question is, will the political Parties heed the public’s call and put tax dodging front and centre of their policies? Any Party that does, and means it, will reap the rewards.

Take action now to keep up the pressure on Party leaders. Get your community on board the Towns Against Tax Dodging Campaign

Photo: ActionAid.