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Tax and the G8: we have proved that change can happen but we've a long way to go

Melanie Ward's picture Posted by Melanie WardHead of Advocacy
 

Developing countries lose three times more to tax havens than they receive in aid. But will anything change as a result of this G8?

Enough food IF flotilla
The Enough Food IF flotilla passes Enniskillen castle as the G8 summit kicks off
Photo: Enough Food for Everyone...IF

Developing countries won't be any better off immediately – this will take years, not months. But the process of change has begun. This time last year it was unthinkable that the links between tax dodging and global poverty would feature so prominently at a G8 summit. At points it was bizarre watching David Cameron, the UK prime minister, use language that could have been written by those working in development agencies. Ed Miliband, too, used the opportunity to launch a welcome call to arms in this area.

Tax has arrived as a major development issue. The action at Lough Erne in Northern Ireland didn't match the ambition of the UK government's talk but it was probably never going to. Tax avoidance is so built-in to the international system that there is a mountain to climb in terms of closing tax havens and ending it permanently.

The G8 has inched towards the foothills of that mountain; but the leaders have not yet managed to start their ascent. On Saturday, UK tax havens agreed to sign an existing tax convention that could deliver benefits to some developing countries – that was a pretty good start.

Sharing tax information

Aside from the success of establishing tax dodging as a global issue, there are mixed results on three main areas. First, on a new agreement on automatically sharing tax information that is vital for tracking down avoiders. The G8 insists their new tax information-sharing deal needs to be open to all countries including the poorest, and this is a welcome shift from cosy deals for rich countries alone. But they've made no concrete commitments yet to ensure that this will really happen or that tax havens will sign up. We still risk a two-tier tax system emerging, with developing countries left trailing.

Secret company ownership

Second, on ending secret company ownership, the outcome falls short and we have been told that black is white – more secrecy is really more openness. Some countries will gather more information on who really owns what, yet this may still be kept secret from those that need the data most, including developing countries. This strays very far from what former South African president Thabo Mbeki and his African Union panel are calling for to help reverse the illicit financial flows from the continent. It is vital that information is made publicly accessible.

Reporting on profits

We are heartened, however, that the G8 has taken steps towards requiring companies to report on the profits they make and the taxes they pay in each country where they operate. If this is taken forward in an enforceable, public way, developing countries will be able to realise real benefits.

When, together, we first raised tax dodging as a global poverty issue, we were told that we were naive, unrealistic, and uninformed.

Yet we have proved that change can happen. All of you who have walked with us can be proud of the start we have made. Whether you signed a petition, shared the campaign on Facebook, or even met with your MP. You made this change happen.

But we have a long way to go hold G8 leaders to their promises and make sure that the climb towards a tax justice accelerates in the months and years to come. And that is exactly what we'll do. Together.

 

Crunch time for the IF campaign as G8 leaders gather in Enniskillen

The world’s media has poured into city of Belfast this weekend in anticipation of the arrival of the heads of state from eight of the world’s richest countries. The whole of the Belfast Hilton Hotel is apparently preserved for Obama’s secret service entourage, and rumours are afoot of Putin taking a dip in Lough Erne at the summit. 

IF campaign cook pot stunt
The Enough Food for Everyone...IF Campaign at Belfast City Hall draw attention for the need for urgent G8 action to tackle hunger
Photo: Caroline Jones/ActionAid UK

Amidst all the furore, ActionAid and partners in the Enough Food for Everyone... IF coalition are here in Northern Ireland to crank up the pressure on David Cameron to ensure the world’s poorest are not forgotten in a deal to tackle tax dodging at the G8 summit over the next two days.

In just the 48 hours that this summit sits, an unfathomable £1.4 billion will be lost by developing countries, siphoned off into tax havens, vital funds that could and should be spent tackling hunger and poverty. We’ve seen a lot of tough talk about tax dodging in recent months; now is the time for action. We need justice for the 1 in 8 people going hungry every day.

IF campaign hand in in Northern IrelandPamela Chisanga from ActionAid Zambia helps present David Cameron with a petition, signed by 1.4 million peopleThis morning in Enniskillen our very own Pamela Chisanga from ActionAid Zambia was one of the delegation who presented David Cameron with the Enough Food IF petition, signed by 1.4 million people across the UK, bringing the message from the global south for urgent action on hunger. Pamela reminded the PM of Caroline Muchanga, a market stall holder in Zambia who pays more tax than the British company whose sugar she sells, pressing him to ensure a deal that works for all countries.

There have been some signs of progress. As thousands gathered at The Big IF Belfast this weekend to send a message to the G8 leaders, the government’s Tax, Trade and Transparency summit in London opened with news that the ten British-linked tax havens have taken the first steps towards transparency, signing a basic deal to share some information about hidden money.

This sounds great, but this is only the start. The real prize in the next two days is a strong global deal at the G8. We will be fighting to ensure the UK stops at nothing less. The ingredients for a global deal to tackle tax avoidance are clear: agreement to share information with poor countries, public registers so tax authorities can trace the real owners of assets and shed light on dodgy deals; and companies opening up their books.

We also need urgent action on land grabs, to protect the poorest communities having their land sold to foreign investors. The G8 must change the rules so that so that no company can take land from poor families without facing repercussions.

The 1 in 8 people going hungry and 3 million children dying from malnutrition every year can’t wait any longer. When the G8 sit down to dinner tonight, I hope the message of the 1.4 million from across the UK will be ringing in their ears.

New Tax Haven Pops Up in London

Chris Jordan's picture Posted by Chris Jordan Tax Justice Campaign Manager
 

Tax havens are often called “sunny places for shady people”.

With just a few days to go before world leaders come together at the G8 summit to hammer out a deal, we though we should remind them just how ridiculous it is to turn a blind eye to these places.

A new tax haven pops up on the London South Bank

As part of the IF campaign, we’ve created the Isle of Shady overlooking the City of London, complete with bags of loot direct from Africa, which is currently in the clutches of some fat cat business men.

We’ll be down on the South Bank, next door to the Oxo Tower all day, asking the public to join the campaign and telling David Cameron and the G8 to sort out shady tax havens next week.

For developing countries it’s no laughing matter. They lose an estimated three times more to tax havens than they receive in aid each year. That’s money that could be invested in supporting small scale farmers, improving roads and irrigation systems, which could end hunger once and for all. Instead, 1 in 8 continues to go hungry every night.

With pressure is mounting on the G8 to agree an ambitious deal that would bring an end to tax haven secrecy – but there’s a real chance that developing countries will be left out in the cold.

We're turning up the pressure to make sure that doesn't happen.

If you’re in London, please drop by, say hello and take action.  If not…then you can show your support by leaving a polite message on David Cameron's Facebook page asking for him to take action to end tax havens. 

The power of people raising their voices

Joy Mghoi's picture Posted by Joy MghoiYouth Campaigner
 

My name is Joy Mwakisambi and I’m an Action Aid Activista from Kenya and am so happy to be here in the UK and most of all to participate in the IF campaign.

Joy and Elly at the Big IF London
Joy the Big IF London with Tanzanian activist Elly Ahimidiwe
Photo: Claire Donner/ActionAid UK

My time here in the UK and my involvement in this campaign has been really amazing. It has been really great, being involved at the heart of the whole campaign, and it was really an honour being able to talk to people about the real situation from the ground and the hunger situation back at home; how my neighbours and my friends and their children have had to go through.

I am very thankful for this opportunity because it gave me a platform to be the voice of the poor, the children who suffer from malnutrition, stunted growth and the many mothers who have lost their children because of hunger, and most of all my neighbours and my friends who have encountered this monster.

The Big IF Campaign at Hyde Park on the 8th was the crowning moment of all our efforts so far, approximately 45,000 people attended. These were people who didn’t come because it was a beautiful sunny day, but because they were part and parcel of the change they wanted to see, the change of making hunger history.

I believe we were successful in making ourselves heard. I hope that as a result of what we all helped make happen, children are going to have their right to food and enjoy their play time because they will have enough food and they will grow uphealthily. That the nights will feel shorter because there is no waking up in the middle of the night and scratching yourself because there is nothing in your stomach.

My eyes a filled with tears of happiness because on this particular day it was not about what colour you were, how smartly dressed you were or how much money you had. Everyone left their titles, skin colour, financial status and every other single thing you can think of at home. They were one people, God’s creation, fighting for the rights of others who had sadly been denied their right to survival.

We should not stop, we should not quit, we should stand together as one creation and keep the pressure on the G8 leaders until they live up to their promises. Together as one let’s make change.

Time to tackle rising food prices caused by biofuels

I was pleased to see the UK's International Development Committee's (IDC) sobering report on Global Food Security this week. The IDC was very clear about one thing: biofuels production is pushing up food prices. In fact, it categorically stated that "Biofuels are driving higher and more volatile food prices and are having a major detrimental impact on food security." Doesn't leave much room for interpretation, does it?

As for solutions, the IDC went on to recommend that "the Renewable Transport Fuel Obligation (RTFO), which commits the UK to consuming biofuel equivalent to 5% of transport fuel volumes, be revised to exclude agriculturally produced biofuels."

Biofuels are currently being discussed in the European Union which is revising its biofuels policies. The UK government has been pushing to address the carbon emissions associated with biofuels consumption through so called Indirect Land Use Change (ILUC) factors, which is a way to ensure that all the extra carbon emissions resulting from biofuels production are accounted for.

This is important and should be commended, but the UK government has remained silent on proposals of capping the amount of food that can be used as fuel.  The IDC makes it clear that "The introduction of ILUC factors and the imposition of a cap are not mutually exclusive options: both can be pursued concurrently. We recommend that the UK Government push for both, and that it push for the cap to be set at as low a level as possible."

It seems that the UK's Government, as well as many of its MEPs, bury their heads in the sand regarding the food price impacts of biofuels consumption. That is despite the OECD, the UN and even the EU itself pointing out that a correlation between switching agricultural land from food production to biofuels production causes food prices. Why is the evidence being ignored? In part, because of effective lobbying from the biofuels industry which focuses on short-term profits and seems to take little account of how biofuels production can affect people and the environment.

While it is in the nature of private companies to try to maximise profits - that is what they are there for - it is disappointing that the politicians we have elected to represent us seem to be defending the corporate interest of a few rather than addressing climate change and food price rises that ultimately affect all of us.

The IDC has addressed the negative effects of biofuels in a refreshingly honest way. Now our politicians here in Westminster and our elected representatives in Brussels must take note of the IDC's report and act accordingly.

A coalition of UK NGOs including ActionAid, Friends of the Earth, RSPB, Greenpeace, Save the Children and Oxfam is calling on the UK and EU to account for all climate impacts of biofuel production and to end the use of food for fuel.