Business tax avoidance hampers development

The Guardian, Letter to the Editor, Tuesday 15 November 2005

There is no doubt that tax avoidance is a matter of concern to the UK and Germany (Leaders, November 14) but the issue has also to be considered in a global context. It is true that business remains committed to shifting profits away from major nations in which reasonable rates of tax are due, despite the fact that their legally due tax supports the infrastructure from which they earn their profits.

More worrying, however, is the extent to which businesses use tax avoidance arrangements to shift their profits out of developing countries into tax havens, where they pay minimal or zero rates of tax. This has deprived developing countries of hundreds of billions of dollars of tax revenues that are critical to financing health, education and development. This slows progress, entrenches poverty, increases inequality and makes poor countries dependent on aid.

Many people have demonstrated their commitment to Making Poverty History this year. Business should share this commitment by paying tax in the countries where their profits are really earned instead of shifting them to tax havens.

And governments should cooperate to introduce coordinated policies against tax avoidance.

John Christensen, Tax Justice Network

Alex Cobham, Oxford Council on Good Governance

Sony Kapoor, Christian Aid

Richard Murphy, Tax Research Limited