Home News Government needs to live up to Budget tax-dodging rhetoric at Addis conference

Government needs to live up to Budget tax-dodging rhetoric at Addis conference

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The Government should live up to promises in Wednesday’s Budget to clamp down on tax avoidance by supporting rather than blocking crucial reforms to global tax rules being discussed at next week’s UN conference in Ethiopia, Oxfam said today.

International Development Secretary Justine Greening will join ministers from around the world at the third Financing for Development Conference in Addis Ababa from 13-16 July to agree how to fund efforts over the next 15 years to end extreme poverty and raise the additional $1.5 trillion a year needed to achieve the UN’s Sustainable Development Goals. These global targets to reduce inequality and ensure a safer, more prosperous future for millions of the world’s poorest and most vulnerable people are due to be finalised in September.

Over months of negotiations, the UK and other rich countries have been vigorously blocking proposals for an international tax body to tackle tax dodging by big companies that the International Monetary Fund says costs poorer countries $212 billion a year. Since 2008, it’s estimated that for every $1 that developing countries gain in support such as foreign direct investment and aid they lose around $2 through practices like tax evasion.

Ana Arendar, Oxfam Head of Inequality, said: “Next week’s UN conference will test how serious the Government is about its Budget pledge to get tough on tax dodging – it should support rather than continue to block vital reforms to give poorer countries an equal say in how global tax rules are set.

“Currently, multinational companies operating in developing countries can easily avoid paying their fair share of tax – money that could help to pay for healthcare and education for some of the world’s poorest people.

“We have a chance to end extreme poverty in the next 15 years but only if developing countries get the resources they need. To give them that chance, the Government should back plans to overhaul the international tax system to fight tax dodging by wealthy companies. UK plans for extra funding to boost poor countries’ ability to collect taxes will help, but without a seat at the table to influence global tax decisions they won’t be able to claim what they’re really owed.

“The UK is right to push other nations to follow its lead in committing to overseas aid spending as too many donors have failed to deliver on past promises – in Addis, rich countries should set out exactly how they will deliver 0.7% of their national income in aid within the next five years.”

Oxfam is calling for 50% of this aid to be targeted at the world’s poorest countries, with climate finance contributions additional to overseas development aid.

Oxfam is also calling on leaders at the Addis conference to not expand private financing of development projects without better safeguards to ensure money is not squandered on initiatives with dubious outcomes for poor people. A public-private hospital in Lesotho, for example, used up 51% of the national health budget but left many rural areas with dangerously low levels of healthcare coverage.

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